Globalization, Creative Destruction, and Labor Share Change: Evidence on the Determinants and Mechanism from Longitudinal Plant-level Data

Mika Maliranta () and Petri Böckerman ()

No 1178, Discussion Papers from The Research Institute of the Finnish Economy

Abstract: ABSTRACT : We examine the sources and micro-level mechanisms of the changes in the labor share of value added. We link the micro-level dynamics of the labor share change with that of productivity and wage growth. Using a useful variant of the decomposition method we make a distinction between the change in the average plant and the micro-level restructuring. With Finnish plant-level data covering three decades we show that micro-level restructuring is the link between the declining labor share and increasing productivity in 12 manufacturing industries of four regions, and that increased international trade is a factor underlying those shifts.

Keywords: globalization; international trade; foreign ownership; micro-level restructuring; labor share (search for similar items in EconPapers)
JEL-codes: F16 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-lab
Date: 2009-02-02

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