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

Author/Editor:

Florence Jaumotte ; Irina Tytell

Publication Date:

December 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 07/298

Subject:

English

Publication Date:

December 1, 2007

ISBN/ISSN:

9781451868616/1018-5941

Stock No:

WPIEA2007298

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

54

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