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Bargaining, openness and the labor share

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  • Schneider, Dorothee

Abstract

This paper investigates determinants of changes of the labor share in developed countries with a focus on Western Europe. Using a country-industry panel that covers the private sector, the paper focuses on long and short-run changes within industries. The results show a large and time-persistent impact of increasing globalization on the labor share, especially if the within-industry changes are considered. Openness seems to be the driving force for downward movements in the industry level labor shares while technological and institutional forces impact these shares positively. Furthermore, while investments into information and communication technology (ICT) increase productivity of workers, it has a negative impact on the labor share as it enables higher economic integration which lowers the labor share. Economic integration has stronger impact on the polarization in Western European labor markets than ICT.

Suggested Citation

  • Schneider, Dorothee, 2011. "Bargaining, openness and the labor share," SFB 649 Discussion Papers 2011-068, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2011-068
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    References listed on IDEAS

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    1. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
    2. repec:adr:anecst:y:2009:i:95-96:p:13 is not listed on IDEAS
    3. Axel Dreher, 2006. "Does globalization affect growth? Evidence from a new index of globalization," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1091-1110.
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    More about this item

    Keywords

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    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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