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Globalization, Productivity Growth, and Labor Compensation

Author

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  • Dreger, Christian

    (DIW Berlin)

  • Fourné, Marius

    (IWH Halle)

  • Holtemöller, Oliver

    (IWH Halle)

Abstract

We analyse how changes in international trade integration affect productivity and the functional income distribution. To account for endogeneity, we construct a leave-out measure for international trade integration for country-industry pairs using international input-output tables. First, we corroborate on the country-industry level that international trade integration increases productivity. Second, we show that international trade integration is associated with higher labour shares in advanced countries but with lower labour shares in manufacturing industries in emerging markets. Finally, we briefly discuss the implications of our results for a possible throwback in international trade integration due to experiences from recent crises.

Suggested Citation

  • Dreger, Christian & Fourné, Marius & Holtemöller, Oliver, 2023. "Globalization, Productivity Growth, and Labor Compensation," IZA Discussion Papers 16010, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16010
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    More about this item

    Keywords

    global value chains; income distribution; globalization; labor share; productivity;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F6 - International Economics - - Economic Impacts of Globalization
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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