Globalization and the Decline in Labor Shares: Exploring the Relationship Beyond Trade and Financial Flows

49 Pages Posted: 2 Oct 2015 Last revised: 16 Apr 2017

See all articles by Andrew T. Young

Andrew T. Young

Texas Tech University - Rawls College of Business

Maria Tackett

Gonzaga University

Date Written: January 1, 2017

Abstract

We employ data from up to 125 countries during the 1970-2009 period to explore the relationship between globalization and labor share. Existing studies report a negative relationship between trade and investment flows and labor shares. While we also find that economic flows are often negatively related to labor shares, measures of social globalization tend to be positively related to labor shares. While greater mobility of goods and capital may be associated with increases in capital’s bargaining power, all else equal, greater flows of information, ideas, and people may increase the bargaining power of workers.

Keywords: labor share, capital share, globalization, functional distribution of income

JEL Classification: O50, O15, J61

Suggested Citation

Young, Andrew T. and Tackett, Maria, Globalization and the Decline in Labor Shares: Exploring the Relationship Beyond Trade and Financial Flows (January 1, 2017). European Journal of Political Economy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2667996 or http://dx.doi.org/10.2139/ssrn.2667996

Andrew T. Young (Contact Author)

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

Maria Tackett

Gonzaga University ( email )

Spokane, WA 99202
United States

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