THE IMPACTS OF GLOBALIZATION ON THE LABOR SHARE: EVIDENCE FROM ASIA

Xiaoshan Hu (), Guanghua Wan and Jing Wang
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Xiaoshan Hu: Institute of World Economy, Fudan University, Shanghai 200433, P. R. China
Jing Wang: School of Economics, Research Center for Economy of Upper Reaches of the Yangtze River, Center for Southeast Asian Studies, Chongqing Technology and Business University, Nan’an District, Chongqing 400067, P. R. China

The Singapore Economic Review (SER), 2020, vol. 65, issue supp01, 57-73

Abstract: The decline in the share of labor income — an indicator of functional income distribution — has contributed to rising income inequality world-wide. Despite a growing literature, little is known about the effects of globalization on the labor share or inequality in Asia where some of the economies are most globalized. Applying fixed-effect regressions to panel data from 29 Asian economies over the period from 1980 to 2014, we focus on the impacts of globalization on the labor share in Asia where globalization is measured by trade openness and FDI. The modeling results show that trade openness is a significant determinant of the labor share. More specifically, the impact of export is significantly negative and the impact of import is positive. In terms of FDI, the coefficient of the inward FDI is significantly positive and that of the outward FDI is significantly negative in developing countries only.

Keywords: Globalization; labor share; income inequality; FDI; trade openness; Asia (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0217590820440038

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