The Impact of Financial Integration on the Labor Share of Income: An Empirical Evidence from a Panel Dataset

Huong Le ()
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Huong Le: Colorado State University

The Indian Journal of Labour Economics, 2020, vol. 63, issue 3, No 2, 597-627

Abstract: Abstract This paper contributes to the literature on the impact of financial liberalization by including the earnings of self-employed while investigating the core determinants and mechanisms driving the income share going to labor during financial integration. The question of the precise impact of liberalization on the share of the self-employed has received less attention in the literature. The author also uses both measures of capital account openness: de jure and de facto indicators. The empirical work is applied for a panel dataset of 30 countries during the period of 1970–2013. Despite using different measurement methods of financial openness, the results from all specifications support the hypothesis that financial integration leads to a decline in the labor share of income for the all countries sample.

Keywords: Labor share of income; Financial openness; Self-employed workers (search for similar items in EconPapers)
JEL-codes: F2 F4 F6 J3 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s41027-020-00234-5

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