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Capital Markets Integration and Labor Market Institutions

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  • Pica Giovanni

    (Università di Salerno)

Abstract

A major development in recent decades in industrialized countries is the decline in national savings rates. Over the same period, in many countries the labor's share of national income has declined and liberalizing labor market reforms have been implemented. This paper seeks to provide a unified account of these developments. We show that globalization, in the form of increased capital mobility, provides incentives to implement labor market reforms that raise the returns to capital and improve efficiency. Nevertheless, in a world where aggregate savings reflect life-cycle motives and are mainly performed out of labor income, the associated fall in the labor share reduces aggregate savings and the pace of capital accumulation.

Suggested Citation

  • Pica Giovanni, 2010. "Capital Markets Integration and Labor Market Institutions," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-57, March.
  • Handle: RePEc:bpj:bejmac:v:10:y:2010:i:1:n:6
    DOI: 10.2202/1935-1690.1757
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    2. Dorothee Schneider, 2011. "The Labor Share: A Review of Theory and Evidence," SFB 649 Discussion Papers SFB649DP2011-069, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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