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Globalisation, concentration and footloose firms: in search of the main cause of the declining labour share

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  • John Hutchinson
  • Damiaan Persyn

Abstract

Over the last two decades the share of national income which accrues to labour has followed a marked downward trend across a host of industrialised countries. This paper reassesses the relative importance of several potential causes of this phenomenon. Overall, the findings suggest that lower trade costs and factors often associated with economic integration such as international low-wage competition and industry concentration have contributed to the decline in the labour share. However, their effects have been limited when compared to the effects of skill-based technological change and cyclical price changes of intermediary goods.
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  • John Hutchinson & Damiaan Persyn, 2012. "Globalisation, concentration and footloose firms: in search of the main cause of the declining labour share," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 17-43, April.
    • Handle: RePEc:spr:weltar:v:148:y:2012:i:1:p:17-43
    DOI: 10.1007/s10290-011-0112-z
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    More about this item

    Keywords

    Labour share; Trade liberalisation; European integration; Technological change; Industry structure; E25; J30; F16; F40;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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