Distributionâ€ Utilization Interactions: A Raceâ€ toâ€ theâ€ Bottom Among Oecd Countries
Codrina Rada and
Metroeconomica, 2016, vol. 67, issue 2, 477-498
We explore four decades of shortâ€ and longâ€ run interactions between income distribution and real economic activity for a panel of OECD countries. Our regressions suggest that the dynamic interaction of these two variables is rather complicated. Estimating the longâ€ run point, we argue that this equilibrium has been shifting as a matter of public policy. We hypothesize that a raceâ€ toâ€ theâ€ bottom arises from a need to be competitive in globalized markets. We report evidence that globalization does have a negative longâ€ run effect on the wage share. We also find that other factors may have been important: unionization appears to be proâ€ wage share, while contractionary monetary policy, financialization, and a lower relative price of investment goods tend to be antiâ€ wage share.
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Persistent link: https://EconPapers.repec.org/RePEc:bla:metroe:v:67:y:2016:i:2:p:477-498
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