AN EMPIRICAL INVESTIGATION INTO INCOME DISTRIBUTION, MARKET STRUCTURE AND UNIONISATION IN UK MANUFACTURING 1980-1984

This paper develops a Kaleckian income distribution model to assess the impact of various quantities on the share of wages in value added for the UK manufacturing sector. In particular it considers the empirical relationship between wage share, market structure, unionisation, and capacity effects. The sample is taken from three digit production industries over the period 1980-1984 and is analysed using sequential cross section and longitudinal techniques. The principle findings suggest that wage share and product market concentration display a consistent negative relationship, although the relationship is not necessarily linear as posited in earlier studies. Moreover, the findings indicate that union organisation ameliorates this monopolisation tendency and a positive relationship is established between unionisation and wage share. We also find that excess capacity negatively affects wage share in the sample period. The longitudinal results illustrate that industry specific effects are significant in explaining the income determination process. We conclude that omission of capacity or fixed effects in previous studies constitutes a specification bias caused by omitted variables