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The micro-level dynamics of declining labour share: lessons from the Finnish great leap

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  • Tomi Kyyrä
  • Mika Maliranta

Abstract

In contrast with the experiences of the United Kingdom and the United States, 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. Copyright 2008 , Oxford University Press.

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  • Tomi Kyyrä & Mika Maliranta, 2008. "The micro-level dynamics of declining labour share: lessons from the Finnish great leap ," Industrial and Corporate Change, Oxford University Press, vol. 17(6), pages 1147-1172, December.
  • Handle: RePEc:oup:indcch:v:17:y:2008:i:6:p:1147-1172
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    Cited by:

    1. Sullström, Risto & Riihelä, Marja & Suoniemi, Ilpo, 2008. "Tax Progressivity and Recent Evolution of the Finnish Income Inequality," Discussion Papers 460, VATT Institute for Economic Research.
    2. Petri Böckerman & Seppo Laaksonen & Jari Vainiomäki, 2009. "Micro-level Rigidity vs. Macro-level Flexibility: Lessons from Finland," Working Papers 0972, University of Tampere, School of Management, Economics.
    3. Kosonen, Tuomas, 2007. "The Increased Revenue from Finnish Corporate Income Tax in the 1990s," Discussion Papers 421, VATT Institute for Economic Research.
    4. Jakub Growiec, 2009. "Determinants of the Labor Share: Evidence from a Panel of Firms," NBP Working Papers 69, Narodowy Bank Polski, Economic Research Department.
    5. Jalava, Jukka & Aulin-Ahmavaara, Pirkko & Alanen, Aku, 2007. "Intangible Capital in the Finnish Business Sector 1975-2005," Discussion Papers 1103, The Research Institute of the Finnish Economy.
    6. Fornaro, Paolo & Luomaranta, Henri, 2015. "Small Versus Large Firms Employment Patterns in Finland: a Comparison," MPRA Paper 66979, University Library of Munich, Germany.
    7. repec:eee:dyncon:v:87:y:2018:i:c:p:74-93 is not listed on IDEAS
    8. Growiec, Jakub & McAdam, Peter & Mućk, Jakub, 2018. "Endogenous labor share cycles: Theory and evidence," Journal of Economic Dynamics and Control, Elsevier, vol. 87(C), pages 74-93.
    9. Petri Böckerman & Seppo Laaksonen & Jari Vainiomäki, 2010. "Micro and Macro Level Wage Rigidity: Lessons from Finland," Finnish Economic Papers, Finnish Economic Association, vol. 23(1), pages 27-42, Spring.

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