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The decline in the wage share: falling bargaining power of labour or technological progress? Industry-level evidence from the OECD

The decline in the wage share: falling bargaining power of labour or technological progress? Industry-level evidence from the OECD

Guschanski, Alexander ORCID: 0000-0002-7818-8264 and Onaran, Özlem ORCID: 0000-0002-6345-9922 (2021) The decline in the wage share: falling bargaining power of labour or technological progress? Industry-level evidence from the OECD. Socio-Economic Review. ISSN 1475-1461 (Print), 1475-147X (Online) (doi:https://doi.org/10.1093/ser/mwaa031)

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Abstract

We investigate whether the downward trend in the wage share is driven by technological change or a decline in labour’s bargaining power. We present an econometric analysis using industry-level data for 14 OECD countries for the 1970-2014 period and test whether the determinants of the wage share differ between manufacturing and service industries, between workers of different skill groups and across countries with different bargaining regimes. Our findings suggest that the wage share declined due to a fall in labour’s bargaining power driven by offshoring to developing countries and changes in labour market institutions such as union density, social government expenditure and minimum wages. In contrast, the effect of technological change is not robust. While we find evidence for a negative effect on medium-skilled workers, our results cast doubt on the hypothesis of skill-biased technological change.

Item Type: Article
Uncontrolled Keywords: income distribution, collective bargaining, trade unions, technological change, globalisation
Subjects: H Social Sciences > HB Economic Theory
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) > Greenwich Political Economy Research Centre (GPERC)
Last Modified: 01 Nov 2021 10:56
URI: http://gala.gre.ac.uk/id/eprint/29007

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