Globalization, Creative Destruction, and Labor Share Change: Evidence on the Determinants and Mechanisms from Longitudinal Plant-Level Data

ETLA Working Paper No. 1178

36 Pages Posted: 2 Feb 2009

See all articles by Petri Bockerman

Petri Bockerman

Labour Institute for Economic Research; University of Turku - Turku School of Economics

Mika Maliranta

ETLA, The Research Institute of the Finnish Economy

Date Written: February 2, 2009

Abstract

We examine the sources and micro-level mechanisms of the changes in the labor share of value added. We link the micro-level dynamics of the labor share change with that of productivity and wage growth. Using a useful variant of the decomposition method we make a distinction between the change in the average plant and the micro-level restructuring. With Finnish plant-level data covering three decades we show that micro-level restructuring is the link between the declining labor share and increasing productivity in 12 manufacturing industries of four regions, and that increased international trade is a factor underlying those shifts.

Keywords: Globalization, International Trade, Foreign ownership, micro-level restructuring, labor share

JEL Classification: F16, J31

Suggested Citation

Bockerman, Petri and Maliranta, Mika, Globalization, Creative Destruction, and Labor Share Change: Evidence on the Determinants and Mechanisms from Longitudinal Plant-Level Data (February 2, 2009). ETLA Working Paper No. 1178, Available at SSRN: https://ssrn.com/abstract=1336469 or http://dx.doi.org/10.2139/ssrn.1336469

Petri Bockerman (Contact Author)

Labour Institute for Economic Research ( email )

FIN-00530 Helsinki
Finland
+358 9 2535 7332 (Phone)
+358 9 2535 7332 (Fax)

HOME PAGE: http://www.petribockerman.fi/

University of Turku - Turku School of Economics ( email )

Rehtorinpellonkatu 3
TURKU, FI-20500
Finland

Mika Maliranta

ETLA, The Research Institute of the Finnish Economy ( email )

Lonnrotink. 4 B
FIN-00120 Helsinki, 00120
Finland
+358 9 609900 (Phone)
+358 9 601753 (Fax)

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