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The Micro-level Dynamics of Declining Labour Share: Lessons from Finnish Great Leap

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Author Info
Tomi Kyyrä
mika Maliranta

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Abstract

ABSTRACT : In contrast with the experiences of the UK and the US, the distribution of labour and capital income has changed sharply in favour of capital in most Continental European and Nordic countries during the past two decades. We examine forces behind the evolution of the aggregate labour share by analysing the dynamics of labour shares within and between firms/plants in the Finnish business sector. Using a decomposition method applied in labour economics and productivity analysis, we show that much of the decline in the aggregate labour share stems from the reallocation of resources between firms and plants, while labour shares at the firm/plant level have remained relatively stable. Pienenevän työn tulo-osuuden mikrotason dynamiikka : Kokemuksia suomalaisesta suuresta harppauksesta

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Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1049.

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Length: 35 pages
Date of creation: 03 Nov 2006
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Handle: RePEc:rif:dpaper:1049

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Keywords: factor income shares; wage policy; decomposition; productivity;

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Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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  2. Pekka Ilmakunnas & Mika Maliranta, 2001. "The Turnover of Jobs and Workers in a Deep Recession: Evidence from the Finnish Business Sector," Discussion Papers 747, The Research Institute of the Finnish Economy. [Downloadable!]
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  5. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Trade costs, firms and productivity," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 917-937, July. [Downloadable!] (restricted)
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  8. William T. Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark E. Schweitzer & Jarkko Turunen & Melanie Ward, 2006. "The interaction of labor markets and inflation: analysis of micro data from the International Wage Flexibility Project," Proceedings, Federal Reserve Bank of San Francisco. [Downloadable!]
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  11. Eric J. Bartelsman & Mark Doms, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September. [Downloadable!] (restricted)
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  15. Jovanovic, Boyan & Rousseau, Peter L., 2005. "General Purpose Technologies," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 18, pages 1181-1224 Elsevier. [Downloadable!] (restricted)
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  16. Pryor, Frederic L., 2002. "Quantitative notes on the extent of governmental regulations in various OECD nations," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 693-714, May. [Downloadable!] (restricted)
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  22. Basu, Susanto & Fernald, John G., 2002. "Aggregate productivity and aggregate technology," European Economic Review, Elsevier, vol. 46(6), pages 963-991, June. [Downloadable!] (restricted)
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  23. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, 07. [Downloadable!] (restricted)
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  24. Petri Böckerman & Mika Maliranta, 2003. "The micro-level dynamics of regional productivity growth: The source of divergence in Finland," ERSA conference papers ersa03p32, European Regional Science Association. [Downloadable!]
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  25. Koskela , Erkki & Uusitalo , Roope, 2004. "Unintended convergence – how Finnish unemployment reached the European level," Research Discussion Papers 6/2004, Bank of Finland. [Downloadable!]
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  27. Valerie A. Ramey & Matthew D. Shapiro, 2001. "Displaced Capital: A Study of Aerospace Plant Closings," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 958-992, October. [Downloadable!] (restricted)
  28. Dunne, Timothy & Haltiwanger, John & Troske, Kenneth R., 1997. "Technology and jobs: secular changes and cyclical dynamics," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 107-178, June. [Downloadable!] (restricted)
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  29. repec:rus:hseeco:122439 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kari O. E. Alho & Nuutti Nikula, 2006. "Productivity, Empoyment and Taxes - Evidence on the Potential Trade-offs and Impacts in the EU," Discussion Papers 1054, The Research Institute of the Finnish Economy. [Downloadable!]
  2. Rita Asplund, 2007. "Finland: Decentralisation Tendencies within a Collective Wage Bargaining System," Discussion Papers 1077, The Research Institute of the Finnish Economy. [Downloadable!]
  3. Jyrki Ali-Yrkkö & Mika Pajarinen & Petri Rouvinen & Pekka Ylä-Anttila, 2007. "Family Businesses and Globalization in Finland," Discussion Papers 1080, The Research Institute of the Finnish Economy. [Downloadable!]
  4. Jukka Jalava & Pirkko Aulin-Ahmavaara & Aku Alanen, 2007. "Intangible Capital in the Finnish Business Sector 1975-2005," Discussion Papers 1103, The Research Institute of the Finnish Economy. [Downloadable!]
  5. Aija Leiponen, 2006. "Competing through cooperation: Standard setting in wireless telecommunications," Discussion Papers 1056, The Research Institute of the Finnish Economy. [Downloadable!]
  6. Mikko Ketokivi, 2006. "When Does Co-location of Manufacturing and R&D Matter?," Discussion Papers 1051, The Research Institute of the Finnish Economy. [Downloadable!]
  7. Tuomas Kosonen, 2007. "The Increased Revenue from Finnish Corporate Income Tax in the 1990s," Discussion Papers 421, Government Institute for Economic Research Finland (VATT). [Downloadable!]
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