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

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globalization, international trade,foreign ownership, micro-level restructuring, labor share
globalisaatio, kansainvälinen kauppa, ulkomaalaisomistus, mikro-tason rakenne¬muutos, työn tulo-osuus
Maliranta, Mika - Böckerman, Petri

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.

JEL: F16, J31
Publication year: 2009
Pages: 34
Price: 10€
Language: English
Discussion Papers no. 1178

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