How Has the Globalization of Labor Affected the Labor Income Share in Advanced Countries?

Labor markets around the world have become increasingly integrated over the last two decades, with the entry of China, India and the former Eastern bloc into the world trading system, the removal of restrictions on trade and capital flows, and rapid technological progress. At the same time, the share of labor in national income decreased in most advanced countries. This paper uses a labor share equation derived from a translog revenue function to estimate the contributions of globalization, technological progress, and labor market policies to the decline in the labor share. The results, obtained for 18 advanced countries over 1982- 2002, suggest that globalization was only one of several factors that have affected the labor share. Technological progress, especially in the information and communications sectors, has had a bigger impact, particularly on the labor share in unskilled sectors.Information technology;Labor;Labor markets;labor share, labor compensation, compensation, labor market, labor force, worker, wages, labor shares, labor market policies, labor supply, benefits, wage, labor income, skilled labor, labor statistics, labour, labor cost, labor demand, skilled workers, labor organization, labor forces, labor costs, compensation of employees, labour market, labor force participation, labor market indicators, labour markets, labor productivity, bargaining power, labor economics, wage subsidies, labor market outcomes, displaced workers, labor market flexibility, labor market rigidities, new jobs, job losses, labor market conditions, average unemployment, earnings inequality, jobs, average wage, wage structure, labor market policy, labor market imbalances, labour market impact, labor policies, workers ? compensation