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Why is the wage share falling in emerging economies? Industry level evidence

Why is the wage share falling in emerging economies? Industry level evidence

Guschanski, Alexander and Onaran, Özlem ORCID: 0000-0002-6345-9922 (2017) Why is the wage share falling in emerging economies? Industry level evidence. [Working Paper]

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Abstract

This article presents an econometric analysis of the wage share in seven emerging economies. We focus on the effect of globalisation, captured by participation in global value chains and financial integration, indicators of bargaining power of labour and technological change on the wage share. We use input-output tables that allow us to obtain detailed measures of global value chain participation, and sectoral data to distinguish the effect on high- and low-skilled workers and within manufacturing and service industries. We find a negative effect of offshoring from advanced to emerging economies, as well as negative effects of financial integration. Our findings suggest that the transmission mechanism is a reduction in labours’ bargaining power vis-à-vis capital. We find a robust positive effect of union density on the wage share but no evidence of a negative effect of technological change.

Item Type: Working Paper
Uncontrolled Keywords: wage share; income distribution; emerging economies; global value chains; union density; technological change;
Subjects: H Social Sciences > HD Industries. Land use. Labor
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Greenwich Political Economy Research Centre (GPERC)
Last Modified: 09 Aug 2017 13:03
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/17536

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