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How Has The Globalization of Labor Affected the Labor Income Share in Advanced Countries?

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  • Florence Jaumotte
  • Irina Tytell

Abstract

Labor markets around the world have become increasingly integrated over the last two decades, with the entry of China, India and the former Eastern bloc into the world trading system, the removal of restrictions on trade and capital flows, and rapid technological progress. At the same time, the share of labor in national income decreased in most advanced countries. This paper uses a labor share equation derived from a translog revenue function to estimate the contributions of globalization, technological progress, and labor market policies to the decline in the labor share. The results, obtained for 18 advanced countries over 1982- 2002, suggest that globalization was only one of several factors that have affected the labor share. Technological progress, especially in the information and communications sectors, has had a bigger impact, particularly on the labor share in unskilled sectors.

Suggested Citation

  • Florence Jaumotte & Irina Tytell, 2007. "How Has The Globalization of Labor Affected the Labor Income Share in Advanced Countries?," IMF Working Papers 07/298, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:07/298
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    Cited by:

    1. Andrew T. Young & Hernando Zuleta, 2016. "Golden Rules of Wages," Southern Economic Journal, Southern Economic Association, vol. 83(1), pages 253-270, July.
    2. Yong Wang & Xuewen Liu & Xi Li, 2013. "A Model of China's State Capitalism," 2013 Meeting Papers 853, Society for Economic Dynamics.
    3. Petra Duenhaupt, 2012. "Financialization and the rentier income share -- evidence from the USA and Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(4), pages 465-487, June.
    4. 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.
    5. Dorothee Schneider, 2011. "Monitoring, Information Technology and the Labor Share," SFB 649 Discussion Papers SFB649DP2011-066, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    6. Damiani, Mirella & Pompei, Fabrizio & Ricci, Andrea, 2012. "Labour share and employment protection in European economies," MPRA Paper 43058, University Library of Munich, Germany.
    7. Luciano BOGGIO & Vincenzo DALL’AGLIO & Marco MAGNANI, 2010. "On Labour Shares in Recent Decades: A Survey," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 118(3), pages 283-333.
    8. Bental, Benjamin & Demougin, Dominique, 2010. "Declining labor shares and bargaining power: An institutional explanation," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 443-456, March.
    9. Bárbara Cardoso Dias & Ana Urraca Ruiz, 2016. "A Mudança Estrutural Como Indutora Da Distribuição Funcional Da Renda No Brasil," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 021, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    10. repec:eee:poleco:v:52:y:2018:i:c:p:18-35 is not listed on IDEAS
    11. repec:spr:eurasi:v:4:y:2014:i:1:p:3-30 is not listed on IDEAS
    12. repec:spr:pharme:v:4:y:2014:i:1:p:3-30 is not listed on IDEAS
    13. Sandra Eickmeier & Katharina Pijnenburg, 2013. "The Global Dimension of Inflation – Evidence from Factor-Augmented Phillips Curves," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(1), pages 103-122, February.
    14. 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.
    15. Martin Sommer, 2009. "Why Are Japanese Wages So Sluggish?," IMF Working Papers 09/97, International Monetary Fund.
    16. repec:bla:worlde:v:40:y:2017:i:11:p:2378-2402 is not listed on IDEAS
    17. Doan, Ha Thi Thanh & Wan, Guanghua, 2017. "Globalization and the Labor Share in National Income," ADBI Working Papers 639, Asian Development Bank Institute.
    18. Guerriero, Marta & Sen, Kunal, 2012. "What Determines the Share of Labour in National Income? A Cross-Country Analysis," IZA Discussion Papers 6643, Institute for the Study of Labor (IZA).
    19. repec:ilo:ilowps:470913 is not listed on IDEAS
    20. repec:eee:ecosys:v:41:y:2017:i:4:p:492-512 is not listed on IDEAS
    21. Dorothee Schneider, 2011. "Bargaining, Openness, and the Labor Share," SFB 649 Discussion Papers SFB649DP2011-068, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    22. Igor Fedotenkov, 2016. "Labour Shares, Fertility and Longevity in an OLG model," Bank of Lithuania Working Paper Series 28, Bank of Lithuania.
    23. repec:spr:eurasi:v:4:y:2014:i:1:d:10.1007_s40821-014-0004-y is not listed on IDEAS

    More about this item

    Keywords

    Immigration; Globalization; Information technology; International trade; Labor markets; Labor; offshoring; outsourcing; labor share; skills; translog revenue function; labor compensation; compensation; labor market; labor force;

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