Macroeconomic Determinants of the Labour Share of Income: Evidence from OECD Economies

Trofimov, Ivan D. and Nazaria, Md. Aris and Muhammad K. F, Rosli (2018) Macroeconomic Determinants of the Labour Share of Income: Evidence from OECD Economies. [Working Paper]

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Official URL: https://mpra.ub.uni-muenchen.de/85597/

Abstract

The study investigates the relationships between the labour share of income and several macroeconomic variables – the GDP growth, inflation, unemployment, as well as GDP gap and capacity utilization – in industrialised economies between 1960 and the 2010s. Three complementary hypotheses that relate macroeconomic determinants to the labour share dynamics are considered: 'overhead labour' hypothesis, 'realization theory/wage lag' hypothesis and the 'rising strength of labour' hypothesis. The study employs a sequential procedure: testing for the stationarity properties of the variables, using bounds test to identify the presence of cointegrating relationships, and estimating long-run relationships using ARDL or OLS methods. The results show that all three hypotheses are supported only in a limited number of economies, whilst in the majority of cases only certain relationships are prominent. On the whole, the GDP growth rate, the unemployment rate, and to a smaller extent capacity are found to be the principal determinants of the labour share, while change in the level of prices is of subsidiary importance. Keywords: labour share; time series; macroeconomic determinants

Item Type: Working Paper
Additional Information: Acknowledgment UNIMAS Special Short Term Grant F01/SpSTG/1574/2017
Uncontrolled Keywords: labour share; time series; macroeconomic determinants, unimas, university, universiti, Borneo, Malaysia, Sarawak, Kuching, Samarahan, ipta, education, research, Universiti Malaysia Sarawak
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Depositing User: Md. Aris
Date Deposited: 04 Dec 2020 08:08
Last Modified: 29 May 2021 13:19
URI: http://ir.unimas.my/id/eprint/33187

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