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Why is the wage share falling in emerging economies? Industry level evidence

Alexander Guschanski () and Ozlem Onaran ()

No 17536, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: This article presents an econometric analysis of the wage share in seven emerging economies. We focus on the effect of globalisation, captured by participation in global value chains and financial integration, indicators of bargaining power of labour and technological change on the wage share. We use input-output tables that allow us to obtain detailed measures of global value chain participation, and sectoral data to distinguish the effect on high- and low-skilled workers and within manufacturing and service industries. We find a negative effect of offshoring from advanced to emerging economies, as well as negative effects of financial integration. Our findings suggest that the transmission mechanism is a reduction in labours’ bargaining power vis-à-vis capital. We find a robust positive effect of union density on the wage share but no evidence of a negative effect of technological change.

Keywords: wage share; income distribution; emerging economies; global value chains; union density; technological change (search for similar items in EconPapers)
JEL-codes: E25 F66 J50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hme and nep-tid
Date: 2017-08-06
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