How Has the Globalization of Labor Affected the Labor Income Share in Advanced Countries?

56 Pages Posted: 25 Jan 2008

See all articles by Irina Tytell

Irina Tytell

Fidelity Investments; International Monetary Fund (IMF)

Florence Jaumotte

Organization for Economic Co-Operation and Development (OECD)

Date Written: Janurary 2008

Abstract

Labor markets around the world have become increasingly integrated over the last two decades, with the entry of China, India and the former Eastern bloc into the world trading system, the removal of restrictions on trade and capital flows, and rapid technological progress. At the same time, the share of labor in national income decreased in most advanced countries. This paper uses a labor share equation derived from a trans-log revenue function to estimate the contributions of globalization, technological progress, and labor market policies to the decline in the labor share. The results, obtained for 18 advanced countries over 1982-2002, suggest that globalization was only one of several factors that have affected the labor share. Technological progress, especially in the information and communications sectors, has had a bigger impact, particularly on the labor share in unskilled sectors.

Keywords: Globalization, Labor, Labor markets, International trade, Immigration, Information technology

Suggested Citation

Tytell, Irina and Jaumotte, Florence, How Has the Globalization of Labor Affected the Labor Income Share in Advanced Countries? (Janurary 2008). IMF Working Papers, Vol. , pp. 1-54, 2008. Available at SSRN: https://ssrn.com/abstract=1087177

Irina Tytell (Contact Author)

Fidelity Investments ( email )

245 Summer Street
Boston, MA 02210
United States

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Florence Jaumotte

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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