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Determinants of the wage share: a panel analysis of advanced and developing economies

Research output: Contribution to journalArticle

Original languageEnglish
Pages (from-to)3-33
Number of pages31
JournalBritish Journal of Industrial Relations
Volume55
Issue number1
Early online date12 Nov 2015
Publication statusPublished - 1 Mar 2017

Bibliographical note

The paper is based on project ?New Perspectives on Wages and Economic Growth? for the International Labour Organisation (ILO). Earlier versions of this paper were presented at the Regulating for Decent Work conference, ILO, Geneva and at Kingston University.

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Abstract

Wage shares have declined substantially in all OECD countries and most developing economies since 1980. This study uses a new ILO/IILS dataset on adjusted wage shares for a panel of up to 43 developing and 28 advanced economies (1970–2007) to explain changes in wage shares and assess the relative contributions of technological change, financialization, globalization and welfare state retrenchment. We find strong negative effects of financialization as well as negative effects of welfare state retrenchment. Globalization has (in production) robust negative effects in advanced as well as in developing economies, which is at odds with the Stolper–Samuelson theorem. We find small, and for developing countries positive effects of technological change. Our results support a Political Economy approach to explaining income distribution.

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