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Technology, Market Regulations, and Labor Share Dynamics

In: Labor Income Share in Asia

Author

Listed:
  • Mary O’Mahony

    (King’s College)

  • Michela Vecchi

    (Middlesex University)

  • Francesco Venturini

    (University of Perugia)

Abstract

We investigate the causes of the decline in the labor share, exploring the effect of technology vis-à-vis the role of market regulations, namely employment protection legislation, product market regulation, and intellectual property rights (IPR) protection. Our results show that, in the long run, productivity upgrades and information and communication technology capital diffusion are major sources of the decline in the labor share. IPR protection is the only dimension of the institutional setting that affects (positively) the share of industry income accruing to labor. Our results also show that hysteresis characterizes the dynamics of the labor share in all countries. This further corroborates the idea that institutional differences are not the main source of variation in labor share movements, as the negative trend is common to countries with different regulatory settings.

Suggested Citation

  • Mary O’Mahony & Michela Vecchi & Francesco Venturini, 2019. "Technology, Market Regulations, and Labor Share Dynamics," ADB Institute Series on Development Economics, in: Gary Fields & Saumik Paul (ed.), Labor Income Share in Asia, chapter 0, pages 81-101, Springer.
    • Handle: RePEc:spr:adbchp:978-981-13-7803-4_4
    DOI: 10.1007/978-981-13-7803-4_4
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    Citations

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    Cited by:

    1. Mary O’Mahony & Michela Vecchi & Francesco Venturini, 2021. "Capital Heterogeneity and the Decline of the Labour Share," Economica, London School of Economics and Political Science, vol. 88(350), pages 271-296, April.
    2. Mary O'Mahony & Michela Vecchi & Francesco Venturini, 2019. "Technology, Intangible Assets and the Decline of the Labor Share," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2019-17, Economic Statistics Centre of Excellence (ESCoE).
    3. Raihan, Selim, 2021. "Functional Income Distribution and Inequality in the Asia-Pacific Countries," MPRA Paper 110469, University Library of Munich, Germany.

    More about this item

    Keywords

    Labor share; Technological change; ICT capital; Market regulations; Hysteresis;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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