Labor Income Share at the Firm Level: Global Trends

37 Pages Posted: 6 Jan 2020

See all articles by Saumik Paul

Saumik Paul

World Bank; University of Nottingham - Malaysia Campus

Hironobu Isaka

Japan International Cooperation Agency (JICA)

Abstract

Micro-level studies provide insightful knowledge on the drivers of the labor income share. This paper introduces a novel firm-level dataset on the labor income share. Using the World Bank Enterprise Survey data, we put together an unbalanced panel comprising 146,666 firms from 139 countries and spanning a period from 2002 to 2017. We define the firm-level labor income share following three alternative approaches and compare these estimates across income groups, regions, firm sizes, and ownership types.The estimates average around .45, with considerable variations across regions and firm characteristics. Manufacturing firms tend to have a lower labor income share as the firm size increases. Large firms in services, both foreign and state-owned, pay a higher share of income to laborers. Regression results indicate that laborers in more productive firms enjoy a lower share of income; however, we do not find any strong correlation between globalization and the labor income share at the firm level.

Keywords: labor income share, cross-country data, income distribution

JEL Classification: E24, E25, J30

Suggested Citation

Paul, Saumik and Isaka, Hironobu, Labor Income Share at the Firm Level: Global Trends. IZA Discussion Paper No. 12852, Available at SSRN: https://ssrn.com/abstract=3513694 or http://dx.doi.org/10.2139/ssrn.3513694

Saumik Paul (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

University of Nottingham - Malaysia Campus ( email )

Jalan Broga
Semenyih
Selangor Darul Ehsan, Selangor 43500
Malaysia

Hironobu Isaka

Japan International Cooperation Agency (JICA)

Japan

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