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Globalization, creative destruction, and labour share change: evidence on the determinants and mechanisms from longitudinal plant-level data

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  • Petri Böckerman
  • Mika Maliranta

Abstract

The labour share of GDP has declined in recent decades in many leading economies. This paper examines the mechanisms of falling labour share using Finnish manufacturing plant-level data over three decades. Using a useful variant of the decomposition method, we make a distinction between the changes in the average plant and the micro-level restructuring. We show that micro-level restructuring is the link between the declining labour share and increasing productivity, and that increased international trade is a factor underlying those shifts. Copyright 2012 Oxford University Press 2011 All rights reserved, Oxford University Press.

Suggested Citation

  • Petri Böckerman & Mika Maliranta, 2012. "Globalization, creative destruction, and labour share change: evidence on the determinants and mechanisms from longitudinal plant-level data," Oxford Economic Papers, Oxford University Press, vol. 64(2), pages 259-280, April.
  • Handle: RePEc:oup:oxecpp:v:64:y:2012:i:2:p:259-280
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    File URL: http://hdl.handle.net/10.1093/oep/gpr031
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    Cited by:

    1. Yu Zheng & Raul Santaeulalia & Dongya Koh, 2015. "Labor Share Decline and the Capitalization of Intellectual Property Products," 2015 Meeting Papers 844, Society for Economic Dynamics.
    2. Fukao, Kyoji & Perugini, Cristiano, 2018. "The Long-Run Dynamics of the Labour Share in Japan," Discussion Paper Series 672, Institute of Economic Research, Hitotsubashi University.
    3. Kauhanen, Antti & Maliranta, Mika, 2012. "Micro-components of aggregate wage dynamics," ETLA Working Papers 1, The Research Institute of the Finnish Economy.
    4. Benjamin Bridgman, 2014. "Is Labor's Loss Capital's Gain? Gross versus Net Labor Shares," BEA Working Papers 0114, Bureau of Economic Analysis.
    5. Fornaro, Paolo & Luomaranta, Henri, 2015. "Small Versus Large Firms Employment Patterns in Finland: a Comparison," MPRA Paper 66979, University Library of Munich, Germany.
    6. Hernando Zuleta, 2015. "Factor shares, inequality, and capital flows," Southern Economic Journal, Southern Economic Association, vol. 82(2), pages 647-667, October.
    7. Fornaro, Paolo & Luomaranta, Henri, 2017. "Small and Medium Firms, Aggregate Productivity and the Role of Dependencies," ETLA Working Papers 47, The Research Institute of the Finnish Economy.
    8. Decreuse, Bruno & Maarek, Paul, 2017. "Can the HOS model explain changes in labor shares? A tale of trade and wage rigidities," Economic Systems, Elsevier, vol. 41(4), pages 472-491.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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