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How Has the Globalization of Labor Affected the Labor Income Share in Advanced Countries?

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Author Info

  • Florence Jaumotte
  • Irina Tytell

Abstract

Labor markets around the world have become increasingly integrated over the last two decades, with the entry of China, India and the former Eastern bloc into the world trading system, the removal of restrictions on trade and capital flows, and rapid technological progress. At the same time, the share of labor in national income decreased in most advanced countries. This paper uses a labor share equation derived from a translog revenue function to estimate the contributions of globalization, technological progress, and labor market policies to the decline in the labor share. The results, obtained for 18 advanced countries over 1982- 2002, suggest that globalization was only one of several factors that have affected the labor share. Technological progress, especially in the information and communications sectors, has had a bigger impact, particularly on the labor share in unskilled sectors.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/298.

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Length: 54
Date of creation: 01 Dec 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/298

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Keywords: Information technology; Labor; Labor markets; labor share; labor compensation; compensation; labor market; labor force; worker; wages; labor shares; labor market policies; labor supply; benefits; wage; labor income; skilled labor; labor statistics; labour; labor cost; labor demand; skilled workers; labor organization; labor forces; labor costs; compensation of employees; labour market; labor force participation; labor market indicators; labour markets; labor productivity; bargaining power; labor economics; wage subsidies; labor market outcomes; displaced workers; labor market flexibility; labor market rigidities; new jobs; job losses; labor market conditions; average unemployment; earnings inequality; jobs; average wage; wage structure; labor market policy; labor market imbalances; labour market impact; labor policies; workers ? compensation;

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References

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Citations

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Cited by:
  1. Sandra Eickmeier & Katharina Pijnenburg, 2013. "The Global Dimension of Inflation – Evidence from Factor-Augmented Phillips Curves," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 75(1), pages 103-122, 02.
  2. John Hutchinson & Damiaan Persyn, 2012. "Globalisation, concentration and footloose firms: in search of the main cause of the declining labour share," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 148(1), pages 17-43, April.
  3. Dorothee Schneider, 2011. "Monitoring, Information Technology and the Labor Share," SFB 649 Discussion Papers SFB649DP2011-066, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  4. Guerriero, Marta & Sen, Kunal, 2012. "What Determines the Share of Labour in National Income? A Cross-Country Analysis," IZA Discussion Papers 6643, Institute for the Study of Labor (IZA).
  5. Dorothee Schneider, 2011. "Bargaining, Openness, and the Labor Share," SFB 649 Discussion Papers SFB649DP2011-068, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  6. Martin Sommer, 2009. "Why Are Japanese Wages so Sluggish?," IMF Working Papers 09/97, International Monetary Fund.
  7. Damiani, Mirella & Pompei, Fabrizio & Ricci, Andrea, 2012. "Labour share and employment protection in European economies," MPRA Paper 43058, University Library of Munich, Germany.
  8. Luciano BOGGIO & Vincenzo DALL’AGLIO & Marco MAGNANI, 2010. "On Labour Shares in Recent Decades: A Survey," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 118(3), pages 283-333.
  9. Stockhammer, Engelbert, 2013. "Why have wage shares fallen? A panel analysis of the determinants of functional income distribution: for the International Labour Organisation (ILO) project "New Perspectives on Wages and Economi," ILO Working Papers, International Labour Organization 470913, International Labour Organization.
  10. Bental, Benjamin & Demougin, Dominique, 2010. "Declining labor shares and bargaining power: An institutional explanation," Journal of Macroeconomics, Elsevier, Elsevier, vol. 32(1), pages 443-456, March.

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