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Globalisation, concentration and footloose firms: in search of the main cause of the declining labour share

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  • Damiaan Persyn
  • John Hutchinson

Abstract

Over the last two decades the share of national income which accrues to labour has followed a marked downward trend across a host of industrialised countries. This paper attempts to assess the importance of several potential causes of this phenomenon. We investigate compositional effects, the effect of declining trade costs, changes in the market structure (concentration) and the effect of low-wage competition between countries. Overall, the findings suggest that lower trade costs and factors related to economic integration such as industry concentration, the market power of firms and increased international low-wage competition indeed affect the labour share. However, their effect has been quite limited when compared to changes in the sectoral composition, the effects of technological change, cyclical factors and changes in the prices of intermediary goods.

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Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 22909.

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Date of creation: 2009
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Handle: RePEc:lic:licosd:22909

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Keywords: factor shares; globalisation;

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Cited by:
  1. Jan Hogrefe & Marcus Kappler, 2013. "The labour share of income: heterogeneous causes for parallel movements?," Journal of Economic Inequality, Springer, vol. 11(3), pages 303-319, September.
  2. Dario Simon Judzik & Hector Sala Lorda, 2014. "The determinants of capital intensity in Japan and the U.S," Working Papers wpdea1404, Department of Applied Economics at Universitat Autonoma of Barcelona.
  3. 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, vol. 148(1), pages 17-43, April.
  4. Michael Siegenthaler & Tobias Stucki, 2014. "Dividing the Pie: the Determinants of Labor’s Share of Income on the Firm Level," KOF Working papers 14-352, KOF Swiss Economic Institute, ETH Zurich.

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