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

  • John Hutchinson
  • Damiaan Persyn

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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Paper provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives in its series Vives discussion paper series with number 18.

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Date of creation: 2011
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Handle: RePEc:ete:vivwps:18
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