The Labour Share of Income: Heterogeneous Causes for Parallel Movements?

27 Pages Posted: 15 May 2010 Last revised: 17 May 2010

See all articles by Jan Hogrefe

Jan Hogrefe

ZEW – Leibniz Centre for European Economic Research

Marcus Kappler

Center for European Economic Research (ZEW)

Date Written: 2010

Abstract

The aim of this paper is to take a structured approach at estimating the coefficients of factors explaining movements of the labour share across countries. In particular, we focus on proper dynamic specification and test the validity of the homogeneity assumption of slope coefficients frequently implied in previous studies. We employ fixed effect estimators as well as pooled mean group and mean group estimators, the latter in a dynamic heterogeneous panel framework.

We find support for a dynamic estimation setup and derive statements regarding the homogeneity assumption with respect to the three most prominent explanatory variables in the literature: the capital-output ratio, total factor productivity and trade openness. In addition, we take account of different institutional arrangements across countries.

Keywords: factor income, labour share, dynamic heterogeneous panel models

JEL Classification: C23, E23, E25, F16

Suggested Citation

Hogrefe, Jan and Kappler, Marcus, The Labour Share of Income: Heterogeneous Causes for Parallel Movements? (2010). ZEW - Centre for European Economic Research Discussion Paper No. 10-024, Available at SSRN: https://ssrn.com/abstract=1605200 or http://dx.doi.org/10.2139/ssrn.1605200

Jan Hogrefe (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Marcus Kappler

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany
+49 621 1235 157 (Phone)
+49 621 1235 223 (Fax)

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