The Micro-Level Dynamics of Declining Labour Share: Lessons from the Finnish Great Leap

Tomi Kyyrä and Mika Maliranta

No 406, Discussion Papers from VATT Institute for Economic Research

Abstract: In contrast with the experiences of the UK and the US, the distribution of labour and capital income has changed sharply in favour of capital in most Continental European and Nordic countries during the past two decades. We examine forces behind the evolution of the aggregate labour share by analysing the dynamics of labour shares within and between firms/plants in the Finnish business sector. Using a decomposition method applied in labour economics and productivity analysis, we show that much of the decline in the aggregate labour share stems from the reallocation of resources between firms and plants, while labour shares at the firm/plant level have remained relatively stable.

Keywords: Factor income shares; wage policy; decomposition; productivity; Income distribution; Tulonjako; Labour market; Työmarkkinat; Labor market and policies promoting economic growth; Työmarkkinat ja kasvua tukeva politiikka (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (6)

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https://www.doria.fi/handle/10024/148389

Related works:
Journal Article: The micro-level dynamics of declining labour share: lessons from the Finnish great leap * (2008)
Working Paper: The Micro-level Dynamics of Declining Labour Share: Lessons from Finnish Great Leap (2006)
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