Research Article
BibTex RIS Cite

Unionization and Labor Share of Income Distribution: An Empirical Investigation of OECD Countries

Year 2019, Volume: 4 Issue: 1, 39 - 48, 30.07.2019
https://doi.org/10.30927/ijpf.588970

Abstract

This paper investigates the effects of unionization of
the labor force and capital openness on the labor share of the income
distribution. This paper empirically studies the relationship between labor
share and unionization for OECD countries by regressing labor share on
unionization of the labor force and other controlling variables. We use the Generalized
Least Squares estimation method in panel data for the period of 1999-2011.  Our controlling variables include political
stability, economic growth, and capital share. 
We employ different panel data techniques with different hypothesis
testing for robustness.  Our regression
results show that an increase in capital openness decreases labor share while
an increase in unionization rate increases it. On the other hand, political
stability has a positive effect on labor shares while economic growth seems to
affect labor shares negatively. Also, an increase in capital share decreases
the labor share but it is not statistically significant.

References

  • ReferencesChinn, M. D. & Ito, H. (2006). "What Matters for Financial Development? Capital Controls, Institutions, and Interactions." Journal of Development Economics, Vol. 81(1), pp. 163-192.
  • Chinn, M. D. & Ito, H. (2016). “The Chinn-Ito Index”. (08.04.2016). http://web.pdx.edu/~ito/Chinn-Ito_website.htm.
  • Elveren, A. Y., Marr, C., & Renard, Y. (2017). “Feminization of Labour and Profit Rates: Evidence from OECD Countries.” Applied Economics Letters, Vol. 24(7), pp. 481-484. doi: 10.1080/13504851.2016.1203057.
  • Feenstra, R. C., Inklaar, R. & Timmer, M. P. (2015). "The Next Generation of the Penn World Table." American Economic Review, Vol. 105(10), pp. 3150-3182, available for download at www.ggdc.net/pwt .
  • Fichtenbaum, R. (2009). “The Impact of Unions on Labor's Share of Income: A Time-Series Analysis.” Review of Political Economy, Vol. 21(4), pp. 567-588, doi: 10.1080/09538250903214859.
  • Herzer, D. (2014). “Unions and Income Inequality: Evidence from Ireland”, Applied Economics Letters 21(1): 24-27. doi: 10.1080/13504851.2013.835471.
  • Jayadev, A. (2007). “Capital Account Openness and the Labour Share of Income.” Cambridge Journal of Economics, Vol.31(3), pp. 423-443. doi: 10.1093/cje/bel037.
  • Mishel, L. & Schieder, J. (2016). “As union membership has fallen, the top 10 percent have been getting a larger share of income.” Economic Policy Institute. https://www.epi.org/publication/as-union-membership-has-fallen-the-top-10-percent-have-been-getting-a-larger-share-of-income/.
  • OECD & Visser, J. (2016). “ICTWSS database (Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts)”. (08.04.2016). https://stats.oecd.org/Index.aspx?DataSetCode=UN_DEN.
  • Penn World Table 8.1 (08.04.2016). doi: 10.15141/S5NP4S. https://www.rug.nl/ggdc/productivity/pwt/pwt-releases/pwt8.1.
  • Schultz, T. P. & Mwabu, G. (1998). “Labor Unions and the Distribution of Wages and Employment in South Africa.” ILR Review, Vol. 51(4), pp. 680-703. doi: 10.1177/001979399805100407.
  • The World Bank. “World Development Indicators”. (08.04.2016). http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators.
  • The World Bank. “Worldwide Governance Indicators”. (08.04.2016). http://databank.worldbank.org/data/source/worldwide-governance-indicators.
  • Visser, J. (2016). “ICTWSS Database. version 5.1”. Amsterdam: Amsterdam Institute for Advanced Labour Studies (AIAS), University of Amsterdam. September 2016. http://www.uva-aias.net/en/ictwss/.
  • Wallace, M., Leicht, K. T. & Raffalovich, L.E. (1999). “Unions, Strikes, and Labor’s Share of Income: A Quarterly Analysis of the United States, 1949-1992.” Social Science Research, Vol. 28(1999), pp. 265-288. doi: 10.1006/ssre.1999.0647.
  • Young, A. T. & Lawson, R. A. (2014). “Capitalism and Labor Shares: A Cross-Country Panel Study.” European Journal of Political Economy, Vol. 33(2014), pp. 20-36. doi: 10.1016/j.ejpoleco.2013.11.006.
  • Young, A. T. & Zuleta, H. (2018). “Do Unions Increase Labor Shares?: Evidence from US Industry-Level Data.” Eastern Economic Journal, Vol. 44(4), pp. 558-575. doi: 10.1057/s41302-016-0086-6.

Unionization and Labor Share of Income Distribution: An Empirical Investigation of OECD Countries

Year 2019, Volume: 4 Issue: 1, 39 - 48, 30.07.2019
https://doi.org/10.30927/ijpf.588970

Abstract

This paper investigates the effects of unionization of the labor force and capital openness on the labor share of the income distribution. This paper empirically studies the relationship between labor share and unionization for OECD countries by regressing labor share on unionization of the labor force and other controlling variables. We use the Generalized Least Squares estimation method in panel data for the period of 1999-2011.  Our controlling variables include political stability, economic growth, and capital share.  We employ different panel data techniques with different hypothesis testing for robustness.  Our regression results show that an increase in capital openness decreases labor share while an increase in unionization rate increases it. On the other hand, political stability has a positive effect on labor shares while economic growth seems to affect labor shares negatively. Also, an increase in capital share decreases the labor share but it is not statistically significant.

References

  • ReferencesChinn, M. D. & Ito, H. (2006). "What Matters for Financial Development? Capital Controls, Institutions, and Interactions." Journal of Development Economics, Vol. 81(1), pp. 163-192.
  • Chinn, M. D. & Ito, H. (2016). “The Chinn-Ito Index”. (08.04.2016). http://web.pdx.edu/~ito/Chinn-Ito_website.htm.
  • Elveren, A. Y., Marr, C., & Renard, Y. (2017). “Feminization of Labour and Profit Rates: Evidence from OECD Countries.” Applied Economics Letters, Vol. 24(7), pp. 481-484. doi: 10.1080/13504851.2016.1203057.
  • Feenstra, R. C., Inklaar, R. & Timmer, M. P. (2015). "The Next Generation of the Penn World Table." American Economic Review, Vol. 105(10), pp. 3150-3182, available for download at www.ggdc.net/pwt .
  • Fichtenbaum, R. (2009). “The Impact of Unions on Labor's Share of Income: A Time-Series Analysis.” Review of Political Economy, Vol. 21(4), pp. 567-588, doi: 10.1080/09538250903214859.
  • Herzer, D. (2014). “Unions and Income Inequality: Evidence from Ireland”, Applied Economics Letters 21(1): 24-27. doi: 10.1080/13504851.2013.835471.
  • Jayadev, A. (2007). “Capital Account Openness and the Labour Share of Income.” Cambridge Journal of Economics, Vol.31(3), pp. 423-443. doi: 10.1093/cje/bel037.
  • Mishel, L. & Schieder, J. (2016). “As union membership has fallen, the top 10 percent have been getting a larger share of income.” Economic Policy Institute. https://www.epi.org/publication/as-union-membership-has-fallen-the-top-10-percent-have-been-getting-a-larger-share-of-income/.
  • OECD & Visser, J. (2016). “ICTWSS database (Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts)”. (08.04.2016). https://stats.oecd.org/Index.aspx?DataSetCode=UN_DEN.
  • Penn World Table 8.1 (08.04.2016). doi: 10.15141/S5NP4S. https://www.rug.nl/ggdc/productivity/pwt/pwt-releases/pwt8.1.
  • Schultz, T. P. & Mwabu, G. (1998). “Labor Unions and the Distribution of Wages and Employment in South Africa.” ILR Review, Vol. 51(4), pp. 680-703. doi: 10.1177/001979399805100407.
  • The World Bank. “World Development Indicators”. (08.04.2016). http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators.
  • The World Bank. “Worldwide Governance Indicators”. (08.04.2016). http://databank.worldbank.org/data/source/worldwide-governance-indicators.
  • Visser, J. (2016). “ICTWSS Database. version 5.1”. Amsterdam: Amsterdam Institute for Advanced Labour Studies (AIAS), University of Amsterdam. September 2016. http://www.uva-aias.net/en/ictwss/.
  • Wallace, M., Leicht, K. T. & Raffalovich, L.E. (1999). “Unions, Strikes, and Labor’s Share of Income: A Quarterly Analysis of the United States, 1949-1992.” Social Science Research, Vol. 28(1999), pp. 265-288. doi: 10.1006/ssre.1999.0647.
  • Young, A. T. & Lawson, R. A. (2014). “Capitalism and Labor Shares: A Cross-Country Panel Study.” European Journal of Political Economy, Vol. 33(2014), pp. 20-36. doi: 10.1016/j.ejpoleco.2013.11.006.
  • Young, A. T. & Zuleta, H. (2018). “Do Unions Increase Labor Shares?: Evidence from US Industry-Level Data.” Eastern Economic Journal, Vol. 44(4), pp. 558-575. doi: 10.1057/s41302-016-0086-6.
There are 17 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Articles
Authors

Sacit Hadi Akdede 0000-0002-7220-9220

Sidre G.b. Göcekli 0000-0002-5406-4304

Publication Date July 30, 2019
Submission Date July 8, 2019
Acceptance Date July 12, 2019
Published in Issue Year 2019 Volume: 4 Issue: 1

Cite

APA Akdede, S. H., & Göcekli, S. G. (2019). Unionization and Labor Share of Income Distribution: An Empirical Investigation of OECD Countries. International Journal of Public Finance, 4(1), 39-48. https://doi.org/10.30927/ijpf.588970

________________________________________________________________________________________________________________________

9246    9241    Content on this site is licensed under a Creative Commons Attribution 4.0 International license.