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Globalization, Creative Destruction, and Labor Share Change: Evidence on the Determinants and Mechanism from Longitudinal Plant-level Data

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  • Maliranta, Mika
  • Böckerman, Petri

Abstract

We examine the sources and micro-level mechanisms of the changes in the labor share of value added. We link the micro-level dynamics of the labor share change with that of productivity and wage growth. Using a useful variant of the decomposition method we make a distinction between the change in the average plant and the micro-level restructuring. With Finnish plant-level data covering three decades we show that micro-level restructuring is the link between the declining labor share and increasing productivity in 12 manufacturing industries of four regions, and that increased international trade is a factor underlying those shifts.

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Bibliographic Info

Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1178.

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Length: 34 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:rif:dpaper:1178

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Keywords: globalization; international trade; foreign ownership; micro-level restructuring; labor share;

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Cited by:
  1. Kauhanen, Antti & Maliranta, Mika, 2012. "Micro-components of aggregate wage dynamics," ETLA Working Papers 1, The Research Institute of the Finnish Economy.
  2. Bruno Decreuse & Paul Maarek, 2011. "Can the HOS model explain changes in labor shares? A tale of trade and wage rigidities," Working Papers halshs-00551345, HAL.

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