[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/oup/ecpoli/v34y2019i100p723-759..html
   My bibliography  Save this article

Why is labour receiving a smaller share of global income?

Author

Listed:
  • Mai Chi Dao
  • Mitali Das
  • Zsoka Koczan
Abstract
The labour share of income has been on a downward trend in both advanced and emerging economies. Declining labour shares in emerging economies, though less pronounced, present an important puzzle as they contradict the predictions of classical trade theory. This paper presents a stylized mechanism to reconcile these findings, at the centre of which is routinization, that is, the automation of labour in occupations highly exposed to substitution by computer capital. We assemble a novel dataset and introduce a new measure of the exposure to routinization to analyse the drivers of falling labour shares. While technological progress and exposure to routinization explain over half the overall decline in advanced economies, in emerging markets, the globalization of trade and the accompanying capital deepening are the most significant driver, with technological progress and routinization playing a negligible role.

Suggested Citation

  • Mai Chi Dao & Mitali Das & Zsoka Koczan, 2019. "Why is labour receiving a smaller share of global income?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 34(100), pages 723-759.
    • Handle: RePEc:oup:ecpoli:v:34:y:2019:i:100:p:723-759.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/epolic/eiaa004
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesco Grigoli & Zsoka Koczan & Petia Topalova, 2022. "Calling older workers back to work," Applied Economics Letters, Taylor & Francis Journals, vol. 29(6), pages 559-566, March.
    2. Ranaldi, Marco & Milanović, Branko, 2022. "Capitalist systems and income inequality," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 20-32.
    3. Ariel Luis Wirkierman, 2023. "Distributive Profiles Associated with Domestic Versus International Specialization in Global Value Chains," Working Papers Series inetwp200, Institute for New Economic Thinking.
    4. Garcia-Lazaro, Aida & Pearce, Nick, 2023. "Intangible capital, the labour share and national ‘growth regimes’," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 674-695.
    5. Moutsopoulos, Michael & Pelagidis, Theodore, 2021. "Labor Taxation: Insights From The World Economic Forum Survey," MPRA Paper 110823, University Library of Munich, Germany.
    6. Ugur, Mehmet, 2024. "Innovation, market power and the labour share: Evidence from OECD industries," Technological Forecasting and Social Change, Elsevier, vol. 203(C).
    7. Michael MITSOPOULOS & Theodore PELAGIDIS, 2021. "Labor Taxation And Investment In Developed Countries. The Impact On Employment," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 13-31, June.
    8. Federico Riccio & Lorenzo Cresti & Maria Enrica Virgillito, 2022. "The labour share along global value chains. Perspectives and evidence from sectoral interdependence," LEM Papers Series 2022/11, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    9. Yu, Fan & Zheng, Shilin & Zheng, Shuhong & Guo, Chenhao, 2024. "Does carbon ETS affect the distribution of labor's slice of the factor income pie? From the low carbon transition perspective," Energy Economics, Elsevier, vol. 134(C).
    10. Xiao, De & Yu, Fan & Guo, Chenhao, 2023. "The impact of China's pilot carbon ETS on the labor income share: Based on an empirical method of combining PSM with staggered DID," Energy Economics, Elsevier, vol. 124(C).
    11. Ibarra, Carlos A. & Ros, Jaime, 2023. "Trade and factor intensity, and the transmission of the global shock to labor: A panel analysis of the fall of the labor income share in the Mexican manufacturing sector," Economic Systems, Elsevier, vol. 47(1).
    12. Khan, Haris & Shehzad, Choudhry Tanveer & Ahmad, Ferhana, 2021. "Temporal effects of financial globalization on income inequality," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 452-467.
    13. Guschanski, Alexander & Onaran, Özlem, 2021. "The effect of global value chain participation on the labour share – Industry level evidence from emerging economies," Greenwich Papers in Political Economy 31973, University of Greenwich, Greenwich Political Economy Research Centre.
    14. Cerra,Valerie & Lama,Ruy & Loayza,Norman V., 2021. "Links between Growth, Inequality, and Poverty : A Survey," Policy Research Working Paper Series 9603, The World Bank.
    15. Das, Mitali & Hilgenstock, Benjamin, 2022. "The exposure to routinization: Labor market implications for developed and developing economies," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 99-113.
    16. Simone d’alessandro & Tiziano Distefano & Guilherme Spinato Morlin & Davide Villani, 2023. "Policy Responses to Labour-Saving Technologies: Basic Income, Job Guarantee, and Working Time Reduction," JRC Working Papers on Social Classes in the Digital Age 2023-09, Joint Research Centre.
    17. Riandy Laksono & Arianto A. Patunru, 2024. "The dynamics of labor share decline in manufacturing: Evidence from Indonesia," Departmental Working Papers 2024-3, The Australian National University, Arndt-Corden Department of Economics.
    18. Mary O’Mahony & Michela Vecchi & Francesco Venturini, 2021. "Capital Heterogeneity and the Decline of the Labour Share," Economica, London School of Economics and Political Science, vol. 88(350), pages 271-296, April.
    19. Chrisp, Joe & Garcia-Lazaro, Aida & Pearce, Nick, 2023. "Technological chance and growth regimes: Assessing the case for universal basic income in an era declining labour shares," FRIBIS Discussion Paper Series 01-2023, University of Freiburg, Freiburg Institute for Basic Income Studies (FRIBIS).
    20. Kostarakos, Ilias, 2020. "Determinants of the (non-Housing) Labour Income Share in the EU," Papers WP693, Economic and Social Research Institute (ESRI).
    21. Samuele Ialenti & Guido Pialli, 2024. "The increase in the elasticity of substitution between capital and labour: a repeated cross-country investigation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 33(3), pages 380-400, April.
    22. Alexander Guschanski & Özlem Onaran, 2023. "Global Value Chain Participation and the Labour Share: Industry‐level Evidence from Emerging Economies," Development and Change, International Institute of Social Studies, vol. 54(1), pages 31-63, January.
    23. Anita Szymańska & Małgorzata Zielenkiewicz, 2022. "Declining Labour Income Share and Personal Income Inequality in Advanced Countries," Sustainability, MDPI, vol. 14(15), pages 1-14, August.

    More about this item

    Keywords

    E25; F66; O33;
    All these keywords.

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecpoli:v:34:y:2019:i:100:p:723-759.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/cebruuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.