why have wage shares fallen? determinants of functional income distribution. part of the...
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Why have wage shares fallen? Determinants of functional income distribution.Part of the International Labour Organisation (ILO) project “New Perspectives on Wages and Economic Growth”
March 2013
Engelbert StockhammerResearch assistence: Hubert Kohler
Kingston University
ILO Project: New Perspectives on Wages and Economic Growth: The
potentials of “wage-led growth”• Wage-led growth: Concept, theories and policies - Marc Lavoie
and Engelbert Stockhammer• Why have wage shares fallen? An analysis of the determinants
of functional income distribution -Engelbert Stockhammer• Is aggregate demand wage-led or profit-led? a global model -
Özlem Onaran and Giorgos Galanis• Wage-led or Profit-led Supply: Wages, Productivity and
Investment - Servaas Storm and C.W.M. Naastepad• The role of income inequality as a cause of the Great Recession
and global imbalances - Till van Treeck and Simon Sturn • Financialisation, the financial and economic crisis, and the
requirements and potentials for wage-led recovery - Eckhard Hein and Matthias Mundt
3
Motivation
• Since early 1980 dramatic changes in income distribution → lit on personal income distr
• wage shares have been falling • Well documented for OECD countries, less so for developing economies
• Until recently little research, then a series of publications on OECD countries, ... but little on functional distribution in developing countries
• ILO project on ‚wage-led growth‘ • Aim of paper: identify the relative impacts of financialisation,
globalisation, technological change and welfare state retrenchment• Panel 71 countries (28 ADV, 43 DVP), max1970-2007 (in fact: mid
80s-early 2000s) • Panel of ALL as well as developing (DVP) economies• Panel for ADV
4
Mainstream story
• IMF (2007a, p. 161)• globalization is one of several factors that have acted to reduce the
share of income accruing to labor in advanced economies, although rapid technological change has had a bigger impact (…) .
• countries that have enacted reforms to lower the cost of labor to business and improve labor market flexibility have generally experienced a smaller decline in the labor income share.
• EC (2007, p. 260) • “for the period for which the data is available (i.e. from the mid-1980s
to early 2000s), the estimation results clearly indicate • that technological progress made the largest contribution to the fall in
the aggregate labour income share“ • “Globalisation also had a negative impact on the aggregate labour
income share but to a lesser extent”
outline
• framework• Literature• Data• Results
• ALL, DVP• ADV
• conclusion
5
Adjusted Wage Share in advanced (ADV) economies
6
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
60.0
65.0
70.0
75.0
80.0
85.0
ADVJPNUSADEU
Adjusted Wage Share in developing (DVP) economies
7
19701971
19721973
19741975
19761977
19781979
19801981
19821983
19841985
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
200650.0
55.0
60.0
65.0
70.0
75.0
DVP3DVP5DVP16
Personal income distribution USA
9
19511953
19551957
19591961
19631965
19671969
19711973
19751977
19791981
19831985
19871989
19911993
19951997
19992001
20032005
20072009
0
2
4
6
8
10
12
14
16
18
Income share of the top 1% of the income distribution, UK
UK -Top 1% (MC & SA)UK -Top 1% (A)
Correlation top1% and WS
10
AUS -0.68 FIN -0.72 ARG -0.86CAN -0.43 FRA -0.61 CHN -0.83IRL -0.76 ITA -0.83 IDN -0.14GBR -0.71 NLD 0.46 IND -0.18USA -0.80 PRT -0.15 ZAF -0.67
ESP -0.16SWE -0.54JPN -0.30
Framework and comments on the literature
11
Literature on income distribution
• Lots of research on personal distribution• Mostly on advanced economies; labour econ and trade theory, often
micro• Few that combine cross country and time• Some lit on developing countries (Goldberg and Pavcnik 2007 JEL)
• Until recently little on functional distribution • Then a series of publications (EC 2007, IMF 2007, OECD 2007) on
OECD countries• Smaller literature on developing countries
• Includes capital account liberalisation prominently
• Daudey and Garcia-Penalosa (2007) negative correlation between changes in personal and functional income distribution (for large sample)
13
14
15
IMF (2007a), Jayadev (2008)
IMF (2007a)• Estimates adj WS = f(Glob, K/L, ICT, TW, UB)
• Glob: Px, Pm, offshoring, imigration• 18 OECD countries 1983-2002, annual data• Panel (OLS with some robustness checks)
• Story: decline in WS most of all caused by tech change, globalization contributed to decline in WS• Then disaggregate for skilled WS and unskilled WS
Jayadev (2008)• WS = f(Ypc, CA openness [legal], trade openness, tariffs,
int, gov’t share)• 62-89 countries
16
Main factors in the literature
• Technological change• Globalisation• Financialisation• Welfare state retrenchment (or ‘bargaining
power’, LMI)
17
Technological change
• Argument come from discussion of personal distribution• Tech change, in particular ICT favors skilled workers
(complements to ICT) and hurts unskilled workers (substitutes of ICT)
• Overall this leads to a fall in the wage share• Tech change partly implemented through outsourcing
• Variables in empirical research• K-L ratio (Bentolila and Saint-Paul 2003)• Time trends (Ellis and Smith 2007, Guscina 2006: after
1985)• K-L ratio and ICT: IMF (2007a, EC 2007)
18
Globalisation: Stolper-Samuleson vs Political Economy approach • Stolper-Samuelson: changes of relative prices of labor and capital;
abundant factor wins• Outsourcing as a particular form of it• =/= bargainging: mobile factor wins, threat effects (Rodrik)
• General econ perception at odds with specialized literature• Problems of SS & HO: comparative advantage can‘t explain actual trade pattern; assumes full
employment, homog labour ...
• Stolper-Samuleson predicts positive effect of globalisation on WS in developing economies
• but globalization led to increased inequality in developing economies (Goldberg and Pavcnik 2007 JEL)
• Rodrik, Harrison, Jayadev find negative effect on WS in developing countries
• variables• Trade openness (EC 2007)• FDI, outsourcing, ToT (IMF 2007a)• Tariffs (IMF 2007b, Rodrik 1998)
19
Financialisation
• Increasing importance of financial sector and financial investors („shareholder value orientation“)
• has shifted power relation at the expense of labor • ILO (2008), Rossman (2009): shift in power relations• Ex: Private Equity firm buys industrial firm with debt, loads debt onto firm -> firm has to cut
costs to survive• Epstein and Powers (2003) document increase in rentier income
• has decreased investment -> unemployment• Stockhammer (2004), Lazonick and O‘Sullivan (2000): from ‚retain & reinvest‘
to ‚downsize & distribute‘
• variables• So far not included in econometric studies on the determinants of the wage
share• IMF (2007b): effect of financial globalization on personal income distribution• Cap Account openness (Jayadev 2007)
20
ILO 2008 World of Word Report
• “financial liberalization that has contributed to growing inequality in some industrialized countries is the even greater importance attached to “shareholder value” maximization and to private equity funds in corporate management. The demand for higher dividend payouts by active shareholders has made managers more resistant to claims for wage increases than in the past, while the threat of outsourcing and downsizing has weakened the bargaining position of workers” (ILO 2008, p. 50)
21
Welfare state retrenchment
• Welare state increases bargaining power of labour• Effect on wages depends on elastisticy of labor demand• Political science literature on ‚welfare state
retrenchment‘
• Variables• union density, various LMI (IMF 2007a, EC2007)
• LMI have ‚perverse‘ effect, implying very elastic labor demand• LMI: lab mkt flex or bargaining power?
• Gov’t share (Jayadev 2007)• strike (Bentolila and Saint-Paul: national variable in a
sectoral panel)
22
Determinants of income distribution
23
Overview baseline variablesWS = f(fin, tech, wfst, glob)
ALL/DVP ADVfinancialisation FINGLOB FINGLOBglobalisation OPEN OPEN
ToTWelfare state CG CG
UNIONTechnological change
GDPpwINDAG
KLICT
24
DataResults for ALL countriesResults for ADV countries
25
Baseline specification (ALL countries)• Baseline equation (ALL countries):
WS = f(∆y, FINGLOB, OPEN, GOVT, Y/L, IND, AG)• Variables for
• Globalisation: OPEN• Financialisation: FINGLOB• Technological + structural change: Y/L, IND, AG• Welfare state retrenchment: LMI, gov’t
26
Wage share (WS) adjustments
• Problem: self employment, informal sector• Adjusted WS: imputes formal wages to self employed• Some recommend: average between adj WS and WS• Further adjustments: keeping sectoral composition
constant (or at US levels), Kruger (1999), Gollin (2002)
• Note: I don’t do adjustments (or not) myself
• Private wage share (WSP)• WS = (1- CG)*WSP + CG*WSG• WSP = (WS-CG)/(1-CG)
27
Data & sourcesWSAP Adjusted private wage share (1) AMECO, (2) ILO, (3) national
∆y growth WB WDI
FINGLOB Financial globalisation
(Aext+Lext)/Y
IMF (Lane & M-F 07)
OPEN Openness (X+M)/Y WB WDI
ToT Terms of trade (1) AMECO, (2) IMF
CG Gov‘t consumption PENN
UNION Union density BD + BGHS
GDPpw GDP per worker PENN
AG Agricultural share PENN
ICT ICT services/Y KLEMS (ADV); ALL: Groningen
KL Capital labour ratio KLEMS
28
29
30
Robustness tests
• WS = f(∆y, finglob, open, govt, Y/L, ag, ind)• Obs 1450 (dvp 614)
• Estimation method• Fixed effects model: (annual) levels + autocorr correction• First differences (annual)• Non-overlapping 5 yr averages (NO5YA)• GMM
• Results by country groups (ADV vs DVP)• Robustness checks
• Finref• Other fin• LMI• Glob• By income group
31
Baseline specification (ALL)dep var: WSAP
32
coeff t-value
GROWTH -11.94 -4.17***
LOG(FINGLOB) -3.66 -6.99***
OPEN -3.81 -3.21***
LOG(GDPPW) -0.69 -0.32
CG 0.80 3.97***
AG -0.24 -2.72***
IND -0.16 -2.46**
obs 1450
adj r2 0.98
dw 1.72
Baseline specification (DEV)dep var: WSAP
33
coeff t-value
GROWTH -13.85 -3.47***
LOG(FINGLOB) -4.70 -5.30***
OPEN -4.07 -2.38**
LOG(GDPPW) 0.53 0.27
CG 0.79 3.07***
AG -0.21 -2.12**
IND -0.03 -0.30
obs 595
adj r2 0.98
dw 1.78
Table 3. Results for the baseline specification and variations
34
1 2 3 4 5 6 7 8 9GROWTH -11.936 -11.97 -12.32 -11.193 -11.603 -16.086 -9.913 -13.976 -20.581t-value -4.167*** -4.172*** -4.254*** -3.774*** -3.872*** -3.007*** -3.310*** -4.803*** -3.493***LOG(FINGLOB) -3.659 -3.677 -4.384 -3.046 -3.556 -2.551 -3.729 -3.251 -2.7t-value -6.997*** -6.932*** -5.258*** -5.141*** -7.017*** -2.554** -7.049*** -5.623*** -1.5OPEN -3.811 -4.02 -3.821 -6.225 -3.561 -5.775 -3.898 -3.913 -6.41t-value -3.211*** -2.540** -3.191*** -4.436*** -2.869*** -2.595*** -3.306*** -3.141*** -1.905*LOG(GDPPW) -0.658 -0.667 -1.155 -2.364 -4.098 -2.834 -0.62 -0.829 -6.382t-value -0.321 -0.325 -0.568 -1.138 -1.786* -0.616 -0.307 -0.396 -1.316CG 0.801 0.801 0.804 0.392 0.954 -0.049 0.824 0.731 -0.248t-value 3.975*** 3.972*** 3.995*** 2.052** 4.210*** -0.169 4.154*** 3.490*** -0.867AG -0.235 -0.236 -0.228 -0.139 -0.342 -0.421 -0.237 -0.235 -0.532t-value -2.719*** -2.721*** -2.621*** -1.338 -3.700*** -2.195** -2.744*** -2.683*** -2.464**IND -0.159 -0.158 -0.146 -0.261 -0.183 -0.339 -0.162 -0.152 -0.472t-value -2.457** -2.457** -2.208** -3.697*** -2.731*** -2.861*** -2.524** -2.324** -4.026***OPEN*D_HIGHIN 0.513 2.709t-value 0.248 0.779LOG(FINGLOB)*D_HIGHIN 1.238 0.343t-value 1.228 0.187TOT -4.22 -4.783t-value -3.253*** -1.573UNEMPL -0.315 -0.391t-value -4.743*** -4.030***LOG(ICT_CB) 0.26 0.04t-value 0.159 0.023D_CRISIS 0.878 0.261t-value 1.034 0.274D_EXCRIS -1.415 -1.457t-value -2.590*** -1.465obs 1450 1450 1450 1310 1302 664 1450 1427 629adj r2 0.981 0.981 0.981 0.982 0.975 0.977 0.981 0.981 0.975dw 1.719 1.719 1.715 1.675 1.741 1.701 1.71 1.69 1.829
Table 3. Results for the baseline specification and variations
35
1 2 3 4 5 6 7 8 9GROWTH -11.94 -11.97 -12.32 -11.19 -11.60 -16.09 -9.91 -13.98 -20.58LOG(FINGLOB) -3.66 -3.68 -4.38 -3.05 -3.56 -2.55 -3.73 -3.25 -2.70OPEN -3.81 -4.02 -3.82 -6.23 -3.56 -5.78 -3.90 -3.91 -6.41LOG(GDPPW) -0.66 -0.67 -1.16 -2.36 -4.10 -2.83 -0.62 -0.83 -6.38CG 0.80 0.80 0.80 0.39 0.95 -0.05 0.82 0.73 -0.25AG -0.24 -0.24 -0.23 -0.14 -0.34 -0.42 -0.24 -0.24 -0.53IND -0.16 -0.16 -0.15 -0.26 -0.18 -0.34 -0.16 -0.15 -0.47OPEN*D_HIGHIN 0.51 2.71LOG(FINGLOB)*D_HIGHIN 1.24 0.34TOT -4.22 -4.78UNEMPL -0.32 -0.39LOG(ICT_CB) 0.26 0.04D_CRISIS 0.88 0.26D_EXCRIS -1.42 -1.46obs 1450 1450 1450 1310 1302 664 1450 1427 629adj r2 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98dw 1.72 1.72 1.72 1.68 1.74 1.70 1.71 1.69 1.83
Table 10. Baseline specification and different estimation methods – adv countries
36
1 2 3 4 5 6 7 8FE diff 5yr GMM FE diff 5yr GMM
lag.dep.var 0.479 0.293GROWTH -16.434 -11.044 -75.851 -25.229 -16.27 -12.153 -70.857 -11.836LOG(FINGLOB) -2.418 -1.286 -6.199 -1.185 -2.14 -0.906 -6.203 -2.45OPEN -5.888 -8.095 4.32 3.504 -6.566 -7.778 1.992 -8.478TOT -4.546 -3.256 1.391 -3.603 -4.662 -3.033 -0.045 -9.81CG 0.929 1.483 -1.034 0.558 1.255 1.72 -0.815 1.358UNION 0.099 0.023 0.115 0.307 0.135 0.056 0.14 0.495LOG(KL_KLEMS) -7.034 -4.136 -5.932 -5.582 -0.162 1.148 -4.015 9.579LOG(ICT_KLEMS) 1.436 3.596 1.775 -0.178 0.141 2.823 1.633 -2.729UNEMPL -0.322 -0.344 -0.249 -0.826obs 470 470 87 460 470 470 87 460adj r2 0.94 0.417 0.909 NA 0.944 0.449 0.916 NAdw 1.814 1.817 1.976 NA 1.884 1.784 2.048 NA
Table 8. Results with financial reform variables
37
1 2 3 4 5 6 7 8GROWTH -11.94 -12.75 -12.16 -12.37 -12.03 -12.33 -12.21 -12.14LOG(FINGLOB) -3.66 -3.48 -3.58 -3.60 -3.60 -3.63 -3.59 -3.42OPEN -3.81 -5.03 -4.95 -5.03 -5.02 -5.01 -5.09 -5.03LOG(GDPPW) -0.66 -3.02 -3.07 -2.89 -2.77 -3.04 -2.87 -2.51CG 0.80 0.64 0.66 0.67 0.69 0.67 0.67 0.67AG -0.24 -0.28 -0.26 -0.26 -0.26 -0.25 -0.26 -0.28IND -0.16 -0.18 -0.17 -0.17 -0.17 -0.17 -0.17 -0.17FINREF_CC -0.66FINREF_IRC -0.21FINREF_EB -0.11FINREF_PRIV -0.30FINREF_ICF 0.08FINREF_SM -0.41FINREF_XN -3.10obs 1450 1177 1177 1177 1177 1177 1177 1177adj r2 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98dw 1.72 1.66 1.66 1.66 1.66 1.66 1.66 1.65
Table 9. Results with labour market institutions variables
38
1 2 3 4 5 6 7 8GROWTH -11.94 -13.28 -12.30 -12.55 -12.34 -12.30 -12.79 -11.88LOG(FINGLOB) -3.66 -3.14 -2.75 -2.82 -2.69 -2.71 -3.15 -3.42OPEN -3.81 -3.16 -4.68 -3.84 -4.78 -4.80 -3.68 -3.78LOG(GDPPW) -0.66 -2.56 -1.52 -2.09 -2.02 -1.99 1.20 -0.25CG 0.80 0.62 0.62 0.43 0.56 0.57 0.77 0.80AG -0.24 -0.35 -0.29 -0.33 -0.29 -0.28 -0.25 -0.26IND -0.16 -0.10 -0.22 -0.18 -0.22 -0.22 -0.19 -0.17MW_MNW -0.48UB_GRR1 -2.51UB_COVERAGE 0.51EPL_AN4Y -1.22EPL_SP4Y 0.08LOG(LF) 5.00LOG(POP) -9.75obs 1450 718 1007 878 1026 1026 1242 1450adj r2 0.98 0.97 0.98 0.98 0.98 0.98 0.98 0.98dw 1.72 1.66 1.72 1.69 1.70 1.71 1.74 1.72
Other variations
• IMF LMI dataset (minW, UB, EPL)• Nothing
• IMF financial reform (8 variables)• Globalisation
• X have neg, M have pos effect• FDI: no effect• Priv credit, interest rate: some pos effect
39
Contributions to changes in the wage share, ALL countries, 1990/94-2000/04
40
Fin glob tech wfst
-2
-1.5
-1
-0.5
0
0.5
1
Contributions to change in the wage share 1990/94 to 2000/04
Contributions by estimation method
41
Fin glob tech wfst
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
Contributions to the change in the wage share in different specifica-tions 1990/94 to 2000/04
FEdiff5yrGMM
Contributions to the change in the wage share, developing economies, 1990/94-2000/04
42
fin glob tech wf.st
-1.5
-1
-0.5
0
0.5
1
1.5
Series1
Baseline specification (ADV)
• Baseline equation (advanced ADV countries):
WS = f(∆y, FINGLOB, TOT, OPEN, govt, UNION, K/L, ICT)
• Variables for• Globalisation: OPEN, TOT• Financialisation: FINGLOB• Technological + structural change: Y/L, ICT• Welfare state retrenchment: gov’t, UNION
43
Baseline specification (ADV)
44
coeff t-value
GROWTH -16.43 -5.22***
LOG(FINGLOB) -2.42 -3.37***
OPEN -5.89 -3.21***
TOT -4.55 -2.57**
CG 0.93 3.84***
UNION 0.10 1.78*
LOG(KL_KLEMS) -7.03 -1.82*
LOG(ICT_KLEMS) 1.44 1.64
obs 470
adj r2 0.94
dw 1.81
45
fin glob tech wfst
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
Contributions to the change in the wage share, advanced countries 1980/84-2000/04
Conclusion
46
Conclusion
• Main causes of changes in income distribution• financial globalization and welfare state retrenchment as main
causes for decline in wage share
• Developing economies: similar to ADVs• Globalisation and financial globalisation have negative effects
on WS – opposite to what Stolper & Samuelson predict• Positive effect of technological change• Unemployment has weaker effects
• Advanced economies (ADVs)• financial globalization and welfare state retrenchment as main
causes for decline in wage share• Moderate negative effects of technological change
47
Policy conclusions
• Part of project on ‘potentials of wage-led growth’• Neoliberalism has given rise to debt-led or export-led
growth regimes (Lavoie and Stockhammer 2012; Hein 2012). • Both rely on wage suppression• Both are economically unstable and socially unbalanced
• Explore macroeconomic potential of wage-led growth• Positive effects on demand (Onaran and Galanis 2012)• Positive effects on productivity (Storm and Naastepad 2012)
• To increase wage share: tackle financialisation and strengthen the welfare state (role of unions)
48
Appendix. Results ALL, DP
49
Table 4. Results by income group
50
1 2 3 4 5lowin lowmidin upmidin highin highinoecd
GROWTH -20.47 -26.62 -13.34 -10.01 -9.56LOG(FINGLOB) -2.40 -5.05 -2.46 -1.70 -1.77OPEN 12.83 -11.46 -7.56 -2.22 -2.54LOG(GDPPW) -7.46 23.67 8.28 -2.95 -3.69CG -0.99 0.85 0.69 0.67 0.80AG -0.55 -0.07 -0.33 -0.35 -0.32IND -0.12 0.62 -0.21 -0.46 -0.41obs 50 101 426 855 836adj r2 0.99 0.99 0.97 0.97 0.95dw 1.86 2.04 1.72 1.60 1.58
Table 5. Results by estimation method
51
1 2 3 4FE diff 5yr GMM
lag.dep.var. 0.57GROWTH -11.94 -12.15 -32.41 -30.51LOG(FINGLOB) -3.66 -2.65 -2.98 -3.79OPEN -3.81 -4.45 -5.80 2.92LOG(GDPPW) -0.66 4.95 -2.53 1.77CG 0.80 0.74 -0.04 -0.43AG -0.24 -0.28 0.01 -0.01IND -0.16 -0.20 -0.04 0.14obs 1450 1450 281 1352adj r2 0.98 0.17 0.97 NAdw 1.72 1.74 2.33 NA
Table 6. Results with different wage share variables (all countries)
52
1 2 3 4wsap wsa ws_un ws_unido
GROWTH -11.936 -0.107 -0.044 -0.140LOG(FINGLOB) -3.659 -0.033 -0.027 -0.029OPEN -3.811 -0.036 -0.019 -0.130LOG(GDPPW) -0.658 0.000 -0.001 -0.045CG 0.801 0.013 0.004 0.003AG -0.235 -0.002 -0.002 -0.001IND -0.159 -0.002 -0.003 -0.002obs 1450 1450 2089 670adj r2 0.981 0.981 0.958 0.943dw 1.719 1.734 1.857 1.894
Table 7. Results with different wage share variables (developing countries)
53
1 2 3 4wsap wsa ws_un ws_unido
GROWTH -13.846 -0.126 -0.052 -0.157
LOG(FINGLOB) -4.697 -0.043 -0.029 -0.051
OPEN -4.067 -0.040 -0.009 -0.087
LOG(GDPPW) 0.526 0.010 0.025 -0.032
CG 0.789 0.013 0.003 -0.008
AG -0.209 -0.002 -0.002 0.001
IND -0.028 0.000 -0.003 -0.002
obs 595 595 1151 186
adj r2 0.981 0.981 0.934 0.940dw 1.775 1.795 2.111 1.999
Table 8. Results with financial reform variables
54
1 2 3 4 5 6 7 8GROWTH -11.94 -12.75 -12.16 -12.37 -12.03 -12.33 -12.21 -12.14LOG(FINGLOB) -3.66 -3.48 -3.58 -3.60 -3.60 -3.63 -3.59 -3.42OPEN -3.81 -5.03 -4.95 -5.03 -5.02 -5.01 -5.09 -5.03LOG(GDPPW) -0.66 -3.02 -3.07 -2.89 -2.77 -3.04 -2.87 -2.51CG 0.80 0.64 0.66 0.67 0.69 0.67 0.67 0.67AG -0.24 -0.28 -0.26 -0.26 -0.26 -0.25 -0.26 -0.28IND -0.16 -0.18 -0.17 -0.17 -0.17 -0.17 -0.17 -0.17FINREF_CC -0.66FINREF_IRC -0.21FINREF_EB -0.11FINREF_PRIV -0.30FINREF_ICF 0.08FINREF_SM -0.41FINREF_XN -3.10obs 1450 1177 1177 1177 1177 1177 1177 1177adj r2 0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98dw 1.72 1.66 1.66 1.66 1.66 1.66 1.66 1.65
Table 9. Results with labour market institutions variables
55
1 2 3 4 5 6 7 8GROWTH -11.94 -13.28 -12.30 -12.55 -12.34 -12.30 -12.79 -11.88LOG(FINGLOB) -3.66 -3.14 -2.75 -2.82 -2.69 -2.71 -3.15 -3.42OPEN -3.81 -3.16 -4.68 -3.84 -4.78 -4.80 -3.68 -3.78LOG(GDPPW) -0.66 -2.56 -1.52 -2.09 -2.02 -1.99 1.20 -0.25CG 0.80 0.62 0.62 0.43 0.56 0.57 0.77 0.80AG -0.24 -0.35 -0.29 -0.33 -0.29 -0.28 -0.25 -0.26IND -0.16 -0.10 -0.22 -0.18 -0.22 -0.22 -0.19 -0.17MW_MNW -0.48UB_GRR1 -2.51UB_COVERAGE 0.51EPL_AN4Y -1.22EPL_SP4Y 0.08LOG(LF) 5.00LOG(POP) -9.75obs 1450 718 1007 878 1026 1026 1242 1450adj r2 0.98 0.97 0.98 0.98 0.98 0.98 0.98 0.98dw 1.72 1.66 1.72 1.69 1.70 1.71 1.74 1.72
Appendix. Results ADV
56
Table 10. Baseline specification and different estimation methods – adv countries
57
1 2 3 4 5 6 7 8FE diff 5yr GMM FE diff 5yr GMM
lag.dep.var 0.48 0.29GROWTH -16.43 -11.04 -75.85 -25.23 -16.27 -12.15 -70.86 -11.84LOG(FINGLOB) -2.42 -1.29 -6.20 -1.19 -2.14 -0.91 -6.20 -2.45OPEN -5.89 -8.10 4.32 3.50 -6.57 -7.78 1.99 -8.48TOT -4.55 -3.26 1.39 -3.60 -4.66 -3.03 -0.05 -9.81CG 0.93 1.48 -1.03 0.56 1.26 1.72 -0.82 1.36UNION 0.10 0.02 0.12 0.31 0.14 0.06 0.14 0.50LOG(KL_KLEMS) -7.03 -4.14 -5.93 -5.58 -0.16 1.15 -4.02 9.58LOG(ICT_KLEMS) 1.44 3.60 1.78 -0.18 0.14 2.82 1.63 -2.73UNEMPL -0.32 -0.34 -0.25 -0.83obs 470 470 87 460 470 470 87 460adj r2 0.94 0.42 0.91 NA 0.94 0.45 0.92 NAdw 1.81 1.82 1.98 NA 1.88 1.78 2.05 NA
Table 11. Labour market institutions var. (Aleksynska & Schindler dataset), adv. countries
58
1 2 3 4 5 6 7GROWTH -16.43 -14.87 -21.71 -21.25 -21.68 -21.80 -13.90LOG(FINGLOB) -2.42 -3.49 -2.34 -2.41 -2.32 -2.33 -3.69OPEN -5.89 -5.59 -7.55 -7.51 -7.57 -7.55 -4.93TOT -4.55 -9.06 -8.69 -8.00 -8.76 -8.75 -7.87CG 0.93 0.81 0.78 0.75 0.78 0.79 0.85UNION 0.10 0.27 0.06 0.07 0.06 0.06 0.28LOG(KL_KLEMS) -7.03 -13.12 -12.98 -13.47 -12.93 -13.16 -12.50LOG(ICT_KLEMS) 1.44 5.73 4.96 5.07 4.96 5.00 5.87MW_MNW 0.09 -0.15UB_GRR1 0.79 0.70UB_COVERAGE -0.51 -0.75EPL_AN4Y 0.19 0.23EPL_SP4Y 0.22 0.53obs 470 222 347 325 347 347 213adj r2 0.94 0.95 0.95 0.95 0.95 0.95 0.95dw 1.81 1.88 1.85 1.81 1.85 1.84 1.85
Table 12. Labour market institutions var. (Bassanini & Duval dataset), adv. countries
59
1 2 3 4 5 6 7GROWTH -16.43 -21.53 -22.02 -21.78 -21.79 -21.29 -20.99LOG(FINGLOB) -2.42 -2.43 -2.46 -2.47 -2.39 -2.47 -2.51OPEN -5.89 -6.82 -6.92 -6.91 -6.98 -6.93 -6.59TOT -4.55 -7.59 -7.67 -7.50 -7.51 -7.57 -7.65CG 0.93 0.96 0.93 0.94 0.93 0.96 0.98UNION 0.10 0.02 0.02 0.01 0.02 0.02 0.02LOG(KL_KLEMS) -7.03 -14.98 -14.75 -14.95 -14.60 -15.36 -14.39LOG(ICT_KLEMS) 1.44 5.27 5.02 5.08 5.26 5.12 5.33EPL_BD 0.51 0.55BENDUR_BD -0.74 -0.57GRR_BD 0.02 0.02PMR_BD 0.19 0.13TW_BD -0.04 -0.04obs 470 319 319 319 319 319 319adj r2 0.94 0.95 0.95 0.95 0.95 0.95 0.95dw 1.81 1.69 1.69 1.69 1.68 1.70 1.70
Table 13. Results with financial reform variables, advanced countries
60
1 2 3 4 5 6 7 8 9GROWTH -16.43 -15.89 -16.17 -16.08 -16.06 -16.30 -16.09 -16.28 -16.16LOG(FINGLOB) -2.42 -2.62 -2.68 -2.61 -2.61 -2.65 -2.66 -2.61 -2.80OPEN -5.89 -5.82 -5.89 -5.79 -5.80 -5.79 -5.94 -5.85 -6.07TOT -4.55 -5.07 -5.29 -5.02 -5.02 -4.89 -5.01 -4.94 -5.30CG 0.93 1.03 1.02 1.03 1.03 1.00 1.01 1.01 0.98UNION 0.10 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.09LOG(KL_KLEMS) -7.03 -8.64 -8.22 -8.60 -8.50 -8.53 -8.54 -7.96 -8.74LOG(ICT_KLEMS) 1.44 2.16 2.21 2.16 2.15 2.19 2.25 2.22 2.36FINREF_CC 0.11 0.06FINREF_IRC -0.32 -0.40FINREF_EB 0.03 -0.04FINREF_PRIV 0.02 -0.10FINREF_ICF -0.26 -0.30FINREF_SM -0.32 -0.42FINREF_XN -1.76 1.79Obs 470 438 438 438 438 438 438 438 438adj r2 0.94 0.94 0.94 0.94 0.94 0.94 0.94 0.94 0.94Dw 1.81 1.76 1.77 1.77 1.77 1.77 1.78 1.77 1.77
Table 14. Results with technological change variables, advanced countries
61
1 2 3 4 5 6GROWTH -15.71 -15.79 -16.43 -16.72 -17.04 -13.06LOG(FINGLOB) -2.49 -2.62 -2.42 -2.36 -2.41 -2.42OPEN -5.57 -5.67 -5.89 -6.07 -6.53 -5.45TOT -4.56 -4.69 -4.55 -4.55 -4.49 -4.74CG 0.97 0.98 0.93 0.93 1.09 0.63UNION 0.09 0.10 0.10 0.10 0.13 0.08LOG(ICT_KLEMS) 0.26 0.41 1.44 1.47 1.81 0.72LOG(ICT_KLEMS)^2 0.16LOG(KL_KLEMS) -7.03LOG(KL_HOURS_KLEMS) -6.82LOG(KL_AMECO) -18.71LOG(GDPPW) -8.85obs 470 470 470 470 450 470adj r2 0.94 0.94 0.94 0.94 0.94 0.94dw 1.83 1.84 1.81 1.81 1.79 1.73
Table 15. Results with globalisation variables, advanced countries
62
1 2 3 4 5 6 7GROWTH -16.43 -18.39 -16.51 -16.44 -16.71 -16.44 -16.44LOG(FINGLOB) -2.42 -2.08 -2.30 -2.45 -1.83 -2.41 -2.42OPEN -5.89 12.97 -5.61 -5.94 -4.41 -5.88 -5.89TOT -4.55 -2.94 -4.45 -4.55 -4.41 -4.55 -4.55CG 0.93 0.89 0.94 0.93 0.85 0.93 0.93UNION 0.10 0.11 0.10 0.10 0.10 0.10 0.10LOG(KL_KLEMS) -7.03 -6.50 -6.50 -7.14 -6.34 -6.99 -7.06LOG(ICT_KLEMS) 1.44 1.29 1.39 1.43 1.68 1.44 1.44OPEN_x -37.64FDI_in -1.05FDI_out 0.27KOF_glob_ec -0.12KOF_glob_soc -0.003KOF_glob_pol 0.001obs 470 470 470 470 470 470 470adj r2 0.94 0.94 0.94 0.94 0.94 0.94 0.94dw 1.81 1.82 1.81 1.82 1.80 1.81 1.81
63
fin glob tech wfst
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
Contributions to the change in the wage share, advanced countries 1980/84-2000/04
FEdiff5yrGMM
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