EconPapers    
Economics at your fingertips  
 

Development and the labor share

Paul Maarek () and Elsa Orgiazzi ()

No 2015-09, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We highlight a U-shaped relationship between development and the labor share of income. We exploit the “within dimension” of a panel dataset for the labor share in the manufacturing sectors of developing countries. Data is also available at the disaggregated level for 28 manufacturing subsectors. We show that the U-shaped pattern of the labor share is also observed at the subsector level suggesting that it does not correspond to reallocation forces across sectors during the development process. We show that standard theories of develop- ment economics that feature duality on the labor market generate such a pattern. At earlier stages of development, productivity gains are not compensated by wage increases as most of the workforce’s outside opportunities remain in the traditional sector where firms’ productivity is low. At later stages, the labor share increases as the result of wage competition in the modern, high productivity sector.

Keywords: Development; The labor share; Dual labor market (search for similar items in EconPapers)
JEL-codes: E25 J42 O17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://thema.u-cergy.fr/IMG/documents/2015-09.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2015-09

Access Statistics for this paper

More papers in THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise Contact information at EDIRC.
Bibliographic data for series maintained by Stefania Marcassa ().

 
Page updated 2019-04-22
Handle: RePEc:ema:worpap:2015-09