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 Stockhammer
Research 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
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
3
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 mid1980s 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”
4
outline
•
•
•
•
framework
Literature
Data
Results
• ALL, DVP
• ADV
• conclusion
5
Adjusted Wage Share in advanced
(ADV) economies
85.0
80.0
75.0
ADV
JPN
USA
70.0
DEU
65.0
60.0
1970
1980
1990
2000
2010
6
Adjusted Wage Share in developing
(DVP) economies
75.0
70.0
65.0
DVP3
DVP5
DVP16
60.0
55.0
50.0
1970
1980
1990
2000
7
Personal income distribution USA
0
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
1959
1957
1955
1953
1951
Income share of the top 1% of the
income distribution, UK
18
16
14
12
10
UK -Top 1% (MC & SA)
8
UK -Top 1% (A)
6
4
2
9
Correlation top1% and WS
AUS
CAN
IRL
GBR
USA
-0.68
-0.43
-0.76
-0.71
-0.80
FIN
FRA
ITA
NLD
PRT
ESP
SWE
JPN
-0.72
-0.61
-0.83
0.46
-0.15
-0.16
-0.54
-0.30
ARG
CHN
IDN
IND
ZAF
-0.86
-0.83
-0.14
-0.18
-0.67
10
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 variables
WS = f(fin, tech, wfst, glob)
financialisation
ALL/DVP
FINGLOB
ADV
FINGLOB
globalisation
OPEN
Welfare state
CG
OPEN
ToT
CG
UNION
Technological
change
GDPpw
IND
AG
KL
ICT
24
Data
Results for ALL countries
Results 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 & sources
WSAP
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
coeff
GROWTH
t-value
-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
32
Baseline specification (DEV)
dep var: WSAP
coeff
GROWTH
t-value
-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
33
Table 3. Results for the baseline specification and variations
1
2
3
4
5
6
7
8
9
GROWTH
-11.936
-11.97
-12.32 -11.193 -11.603 -16.086
-9.913 -13.976 -20.581
t-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
-2.7
t-value
-6.997*** -6.932*** -5.258*** -5.141*** -7.017*** -2.554** -7.049*** -5.623***
-1.5
OPEN
-3.811
-4.02
-3.821
-6.225
-3.561
-5.775
-3.898
-3.913
-6.41
t-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
-6.382
t-value
-0.321
-0.325
-0.568
-1.138 -1.786*
-0.616
-0.307
-0.396
-1.316
CG
0.801
0.801
0.804
0.392
0.954
-0.049
0.824
0.731
-0.248
t-value
3.975*** 3.972*** 3.995*** 2.052** 4.210***
-0.169 4.154*** 3.490***
-0.867
AG
-0.235
-0.236
-0.228
-0.139
-0.342
-0.421
-0.237
-0.235
-0.532
t-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
-0.472
t-value
-2.457** -2.457** -2.208** -3.697*** -2.731*** -2.861*** -2.524** -2.324** -4.026***
OPEN*D_HIGHIN
0.513
2.709
t-value
0.248
0.779
LOG(FINGLOB)*D_HIGHIN
1.238
0.343
t-value
1.228
0.187
TOT
-4.22
-4.783
t-value
-3.253***
-1.573
UNEMPL
-0.315
-0.391
t-value
-4.743***
-4.030***
LOG(ICT_CB)
0.26
0.04
t-value
0.159
0.023
D_CRISIS
0.878
0.261
t-value
1.034
0.274
D_EXCRIS
-1.415
-1.457
t-value
-2.590***
-1.465
obs
1450
1450
1450
1310
1302
664
1450
1427
629
adj r2
0.981
0.981
0.981
0.982
0.975
0.977
0.981
0.981
0.975
dw
1.719
1.719
1.715
1.675
1.741
1.701
1.71
1.69
1.829
34
Table 3. Results for the baseline specification and variations
GROWTH
LOG(FINGLOB)
OPEN
LOG(GDPPW)
CG
AG
IND
OPEN*D_HIGHIN
LOG(FINGLOB)*D_HIGHIN
TOT
UNEMPL
LOG(ICT_CB)
D_CRISIS
D_EXCRIS
obs
adj r2
dw
1
2
3
4
5
6
-11.94 -11.97 -12.32 -11.19 -11.60 -16.09
-3.66 -3.68 -4.38 -3.05 -3.56 -2.55
-3.81 -4.02 -3.82 -6.23 -3.56 -5.78
-0.66 -0.67 -1.16 -2.36 -4.10 -2.83
0.80 0.80 0.80 0.39 0.95 -0.05
-0.24 -0.24 -0.23 -0.14 -0.34 -0.42
-0.16 -0.16 -0.15 -0.26 -0.18 -0.34
0.51
1.24
-4.22
-0.32
0.26
1450
0.98
1.72
1450
0.98
1.72
1450
0.98
1.72
1310
0.98
1.68
1302
0.98
1.74
664
0.98
1.70
7
8
9
-9.91 -13.98 -20.58
-3.73 -3.25 -2.70
-3.90 -3.91 -6.41
-0.62 -0.83 -6.38
0.82 0.73 -0.25
-0.24 -0.24 -0.53
-0.16 -0.15 -0.47
2.71
0.34
-4.78
-0.39
0.04
0.88
0.26
-1.42 -1.46
1450 1427
629
0.98 0.98 0.98
1.71 1.69 1.83
35
Table 10. Baseline specification and different estimation methods – adv countries
1
FE
lag.dep.var
GROWTH
LOG(FINGLOB)
OPEN
TOT
CG
UNION
LOG(KL_KLEMS)
LOG(ICT_KLEMS)
UNEMPL
obs
adj r2
dw
2
diff
3
5yr
-16.434 -11.044 -75.851
-2.418 -1.286 -6.199
-5.888 -8.095
4.32
-4.546 -3.256
1.391
0.929
1.483 -1.034
0.099
0.023
0.115
-7.034 -4.136 -5.932
1.436
3.596
1.775
470
0.94
1.814
470
0.417
1.817
87
0.909
1.976
4
GMM
0.479
-25.229
-1.185
3.504
-3.603
0.558
0.307
-5.582
-0.178
460
NA
NA
5
FE
6
diff
7
5yr
-16.27 -12.153 -70.857
-2.14 -0.906 -6.203
-6.566 -7.778
1.992
-4.662 -3.033 -0.045
1.255
1.72 -0.815
0.135
0.056
0.14
-0.162
1.148 -4.015
0.141
2.823
1.633
-0.322 -0.344 -0.249
470
470
87
0.944
0.449
0.916
1.884
1.784
2.048
8
GMM
0.293
-11.836
-2.45
-8.478
-9.81
1.358
0.495
9.579
-2.729
-0.826
460
NA
NA
36
Table 8. Results with financial reform variables
1
2
3
4
5
6
7
8
GROWTH
-11.94 -12.75 -12.16 -12.37 -12.03 -12.33 -12.21 -12.14
LOG(FINGLOB) -3.66 -3.48 -3.58 -3.60 -3.60 -3.63 -3.59 -3.42
OPEN
-3.81 -5.03 -4.95 -5.03 -5.02 -5.01 -5.09 -5.03
LOG(GDPPW)
-0.66 -3.02 -3.07 -2.89 -2.77 -3.04 -2.87 -2.51
CG
0.80 0.64 0.66 0.67 0.69 0.67 0.67 0.67
AG
-0.24 -0.28 -0.26 -0.26 -0.26 -0.25 -0.26 -0.28
IND
-0.16 -0.18 -0.17 -0.17 -0.17 -0.17 -0.17 -0.17
FINREF_CC
-0.66
FINREF_IRC
-0.21
FINREF_EB
-0.11
FINREF_PRIV
-0.30
FINREF_ICF
0.08
FINREF_SM
-0.41
FINREF_XN
-3.10
obs
1450 1177 1177 1177 1177 1177 1177 1177
adj r2
0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98
dw
1.72 1.66 1.66 1.66 1.66 1.66 1.66 1.65
37
Table 9. Results with labour market institutions variables
1
2
3
4
5
6
7
8
GROWTH
-11.94 -13.28 -12.30 -12.55 -12.34 -12.30 -12.79 -11.88
LOG(FINGLOB)
-3.66 -3.14 -2.75 -2.82 -2.69 -2.71 -3.15 -3.42
OPEN
-3.81 -3.16 -4.68 -3.84 -4.78 -4.80 -3.68 -3.78
LOG(GDPPW)
-0.66 -2.56 -1.52 -2.09 -2.02 -1.99
1.20 -0.25
CG
0.80
0.62
0.62
0.43
0.56
0.57
0.77
0.80
AG
-0.24 -0.35 -0.29 -0.33 -0.29 -0.28 -0.25 -0.26
IND
-0.16 -0.10 -0.22 -0.18 -0.22 -0.22 -0.19 -0.17
MW_MNW
-0.48
UB_GRR1
-2.51
UB_COVERAGE
0.51
EPL_AN4Y
-1.22
EPL_SP4Y
0.08
LOG(LF)
5.00
LOG(POP)
-9.75
obs
1450
718 1007
878 1026 1026 1242 1450
adj r2
0.98
0.97
0.98
0.98
0.98
0.98
0.98
0.98
dw
1.72
1.66
1.72
1.69
1.70
1.71
1.74
1.72
38
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
Contributions to change in the wage share 1990/94 to 2000/04
1
0.5
0
Fin
glob
tech
wfst
-0.5
-1
-1.5
-2
40
Contributions by estimation method
Contributions to the change in the wage share in different
specifications 1990/94 to 2000/04
2
1.5
1
0.5
FE
diff
0
Fin
-0.5
glob
tech
wfst
5yr
GMM
-1
-1.5
-2
41
Contributions to the change in the wage share,
developing economies, 1990/94-2000/04
1
0.5
0
fin
glob
tech
wf.st
Series1
-0.5
-1
-1.5
42
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)
coeff
GROWTH
t-value
-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
44
Contributions to the change in the wage share,
advanced countries 1980/84-2000/04
0.0
fin
glob
tech
wfst
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
-3.5
45
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
GROWTH
LOG(FINGLOB)
OPEN
LOG(GDPPW)
CG
AG
IND
obs
adj r2
dw
1
2
3
lowin
lowmidin upmidin
-20.47
-26.62
-13.34
-2.40
-5.05
-2.46
12.83
-11.46
-7.56
-7.46
23.67
8.28
-0.99
0.85
0.69
-0.55
-0.07
-0.33
-0.12
0.62
-0.21
50
101
426
0.99
0.99
0.97
1.86
2.04
1.72
4
5
highin highinoecd
-10.01
-9.56
-1.70
-1.77
-2.22
-2.54
-2.95
-3.69
0.67
0.80
-0.35
-0.32
-0.46
-0.41
855
836
0.97
0.95
1.60
1.58
50
Table 5. Results by estimation method
1
FE
lag.dep.var.
GROWTH
LOG(FINGLOB)
OPEN
LOG(GDPPW)
CG
AG
IND
obs
adj r2
dw
-11.94
-3.66
-3.81
-0.66
0.80
-0.24
-0.16
1450
0.98
1.72
2
diff
-12.15
-2.65
-4.45
4.95
0.74
-0.28
-0.20
1450
0.17
1.74
3
5yr
-32.41
-2.98
-5.80
-2.53
-0.04
0.01
-0.04
281
0.97
2.33
4
GMM
0.57
-30.51
-3.79
2.92
1.77
-0.43
-0.01
0.14
1352
NA
NA
51
Table 6. Results with different wage share variables (all countries)
GROWTH
LOG(FINGLOB)
OPEN
LOG(GDPPW)
CG
AG
IND
obs
adj r2
dw
1
wsap
-11.936
-3.659
-3.811
-0.658
0.801
-0.235
-0.159
1450
0.981
1.719
2
3
4
wsa
ws_un ws_unido
-0.107
-0.044
-0.140
-0.033
-0.027
-0.029
-0.036
-0.019
-0.130
0.000
-0.001
-0.045
0.013
0.004
0.003
-0.002
-0.002
-0.001
-0.002
-0.003
-0.002
1450
2089
670
0.981
0.958
0.943
1.734
1.857
1.894
52
Table 7. Results with different wage share variables (developing countries)
1
wsap
GROWTH
2
wsa
3
ws_un
4
ws_unido
-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
0.981
1.775
0.981
1.795
0.934
2.111
0.940
1.999
adj r2
dw
53
Table 8. Results with financial reform variables
1
2
3
4
5
6
7
8
GROWTH
-11.94 -12.75 -12.16 -12.37 -12.03 -12.33 -12.21 -12.14
LOG(FINGLOB) -3.66 -3.48 -3.58 -3.60 -3.60 -3.63 -3.59 -3.42
OPEN
-3.81 -5.03 -4.95 -5.03 -5.02 -5.01 -5.09 -5.03
LOG(GDPPW)
-0.66 -3.02 -3.07 -2.89 -2.77 -3.04 -2.87 -2.51
CG
0.80 0.64 0.66 0.67 0.69 0.67 0.67 0.67
AG
-0.24 -0.28 -0.26 -0.26 -0.26 -0.25 -0.26 -0.28
IND
-0.16 -0.18 -0.17 -0.17 -0.17 -0.17 -0.17 -0.17
FINREF_CC
-0.66
FINREF_IRC
-0.21
FINREF_EB
-0.11
FINREF_PRIV
-0.30
FINREF_ICF
0.08
FINREF_SM
-0.41
FINREF_XN
-3.10
obs
1450 1177 1177 1177 1177 1177 1177 1177
adj r2
0.98 0.98 0.98 0.98 0.98 0.98 0.98 0.98
dw
1.72 1.66 1.66 1.66 1.66 1.66 1.66 1.65
54
Table 9. Results with labour market institutions variables
1
2
3
4
5
6
7
8
GROWTH
-11.94 -13.28 -12.30 -12.55 -12.34 -12.30 -12.79 -11.88
LOG(FINGLOB)
-3.66 -3.14 -2.75 -2.82 -2.69 -2.71 -3.15 -3.42
OPEN
-3.81 -3.16 -4.68 -3.84 -4.78 -4.80 -3.68 -3.78
LOG(GDPPW)
-0.66 -2.56 -1.52 -2.09 -2.02 -1.99
1.20 -0.25
CG
0.80
0.62
0.62
0.43
0.56
0.57
0.77
0.80
AG
-0.24 -0.35 -0.29 -0.33 -0.29 -0.28 -0.25 -0.26
IND
-0.16 -0.10 -0.22 -0.18 -0.22 -0.22 -0.19 -0.17
MW_MNW
-0.48
UB_GRR1
-2.51
UB_COVERAGE
0.51
EPL_AN4Y
-1.22
EPL_SP4Y
0.08
LOG(LF)
5.00
LOG(POP)
-9.75
obs
1450
718 1007
878 1026 1026 1242 1450
adj r2
0.98
0.97
0.98
0.98
0.98
0.98
0.98
0.98
dw
1.72
1.66
1.72
1.69
1.70
1.71
1.74
1.72
55
Appendix. Results ADV
56
Table 10. Baseline specification and different estimation methods – adv countries
1
FE
lag.dep.var
GROWTH
LOG(FINGLOB)
OPEN
TOT
CG
UNION
LOG(KL_KLEMS)
LOG(ICT_KLEMS)
UNEMPL
obs
adj r2
dw
2
diff
3
5yr
-16.43 -11.04 -75.85
-2.42 -1.29 -6.20
-5.89 -8.10
4.32
-4.55 -3.26
1.39
0.93
1.48 -1.03
0.10
0.02
0.12
-7.03 -4.14 -5.93
1.44
3.60
1.78
470
0.94
1.81
470
0.42
1.82
87
0.91
1.98
4
5
6
7
8
GMM
FE
diff
5yr
GMM
0.48
0.29
-25.23 -16.27 -12.15 -70.86 -11.84
-1.19 -2.14 -0.91 -6.20 -2.45
3.50 -6.57 -7.78
1.99 -8.48
-3.60 -4.66 -3.03 -0.05 -9.81
0.56
1.26
1.72 -0.82
1.36
0.31
0.14
0.06
0.14
0.50
-5.58 -0.16
1.15 -4.02
9.58
-0.18
0.14
2.82
1.63 -2.73
-0.32 -0.34 -0.25 -0.83
460
470
470
87
460
NA
0.94
0.45
0.92 NA
NA
1.88
1.78
2.05 NA
57
Table 11. Labour market institutions var. (Aleksynska & Schindler dataset), adv. countries
GROWTH
LOG(FINGLOB)
OPEN
TOT
CG
UNION
LOG(KL_KLEMS)
LOG(ICT_KLEMS)
MW_MNW
UB_GRR1
UB_COVERAGE
EPL_AN4Y
EPL_SP4Y
obs
adj r2
dw
1
-16.43
-2.42
-5.89
-4.55
0.93
0.10
-7.03
1.44
2
-14.87
-3.49
-5.59
-9.06
0.81
0.27
-13.12
5.73
0.09
3
-21.71
-2.34
-7.55
-8.69
0.78
0.06
-12.98
4.96
4
-21.25
-2.41
-7.51
-8.00
0.75
0.07
-13.47
5.07
5
-21.68
-2.32
-7.57
-8.76
0.78
0.06
-12.93
4.96
6
-21.80
-2.33
-7.55
-8.75
0.79
0.06
-13.16
5.00
0.79
-0.51
0.19
470
0.94
1.81
222
0.95
1.88
347
0.95
1.85
325
0.95
1.81
347
0.95
1.85
0.22
347
0.95
1.84
7
-13.90
-3.69
-4.93
-7.87
0.85
0.28
-12.50
5.87
-0.15
0.70
-0.75
0.23
0.53
213
0.95
1.85
58
Table 12. Labour market institutions var. (Bassanini & Duval dataset), adv. countries
GROWTH
LOG(FINGLOB)
OPEN
TOT
CG
UNION
LOG(KL_KLEMS)
LOG(ICT_KLEMS)
EPL_BD
BENDUR_BD
GRR_BD
PMR_BD
TW_BD
obs
adj r2
dw
1
2
3
4
5
6
7
-16.43 -21.53 -22.02 -21.78 -21.79 -21.29 -20.99
-2.42 -2.43 -2.46 -2.47 -2.39 -2.47 -2.51
-5.89 -6.82 -6.92 -6.91 -6.98 -6.93 -6.59
-4.55 -7.59 -7.67 -7.50 -7.51 -7.57 -7.65
0.93
0.96
0.93
0.94
0.93
0.96
0.98
0.10
0.02
0.02
0.01
0.02
0.02
0.02
-7.03 -14.98 -14.75 -14.95 -14.60 -15.36 -14.39
1.44
5.27
5.02
5.08
5.26
5.12
5.33
0.51
0.55
-0.74
-0.57
0.02
0.02
0.19
0.13
-0.04 -0.04
470
319
319
319
319
319
319
0.94
0.95
0.95
0.95
0.95
0.95
0.95
1.81
1.69
1.69
1.69
1.68
1.70
1.70
59
Table 13. Results with financial reform variables, advanced countries
1
GROWTH
-16.43
LOG(FINGLOB)
-2.42
OPEN
-5.89
TOT
-4.55
CG
0.93
UNION
0.10
LOG(KL_KLEMS)
-7.03
LOG(ICT_KLEMS)
1.44
FINREF_CC
FINREF_IRC
FINREF_EB
FINREF_PRIV
FINREF_ICF
FINREF_SM
FINREF_XN
Obs
470
adj r2
0.94
Dw
1.81
2
-15.89
-2.62
-5.82
-5.07
1.03
0.08
-8.64
2.16
0.11
3
-16.17
-2.68
-5.89
-5.29
1.02
0.08
-8.22
2.21
4
-16.08
-2.61
-5.79
-5.02
1.03
0.08
-8.60
2.16
5
-16.06
-2.61
-5.80
-5.02
1.03
0.08
-8.50
2.15
6
-16.30
-2.65
-5.79
-4.89
1.00
0.08
-8.53
2.19
7
-16.09
-2.66
-5.94
-5.01
1.01
0.08
-8.54
2.25
8
-16.28
-2.61
-5.85
-4.94
1.01
0.08
-7.96
2.22
-0.32
0.03
0.02
-0.26
-0.32
438
0.94
1.76
438
0.94
1.77
438
0.94
1.77
438
0.94
1.77
438
0.94
1.77
-1.76
438 438
0.94 0.94
1.78 1.77
9
-16.16
-2.80
-6.07
-5.30
0.98
0.09
-8.74
2.36
0.06
-0.40
-0.04
-0.10
-0.30
-0.42
1.79
438
0.94
1.77
60
Table 14. Results with technological change variables, advanced countries
GROWTH
LOG(FINGLOB)
OPEN
TOT
CG
UNION
LOG(ICT_KLEMS)
LOG(ICT_KLEMS)^2
LOG(KL_KLEMS)
LOG(KL_HOURS_KLEMS)
LOG(KL_AMECO)
LOG(GDPPW)
obs
adj r2
dw
1
2
3
4
5
6
-15.71 -15.79 -16.43 -16.72 -17.04 -13.06
-2.49 -2.62 -2.42 -2.36 -2.41 -2.42
-5.57 -5.67 -5.89 -6.07 -6.53 -5.45
-4.56 -4.69 -4.55 -4.55 -4.49 -4.74
0.97
0.98
0.93
0.93
1.09
0.63
0.09
0.10
0.10
0.10
0.13
0.08
0.26
0.41
1.44
1.47
1.81
0.72
0.16
-7.03
-6.82
-18.71
-8.85
470
470
470
470
450
470
0.94
0.94
0.94
0.94
0.94
0.94
1.83
1.84
1.81
1.81
1.79
1.73
61
Table 15. Results with globalisation variables, advanced countries
GROWTH
LOG(FINGLOB)
OPEN
TOT
CG
UNION
LOG(KL_KLEMS)
LOG(ICT_KLEMS)
OPEN_x
FDI_in
FDI_out
KOF_glob_ec
KOF_glob_soc
KOF_glob_pol
obs
adj r2
dw
1
2
3
4
5
6
7
-16.43 -18.39 -16.51 -16.44 -16.71 -16.44 -16.44
-2.42 -2.08 -2.30 -2.45 -1.83 -2.41 -2.42
-5.89 12.97 -5.61 -5.94 -4.41 -5.88 -5.89
-4.55 -2.94 -4.45 -4.55 -4.41 -4.55 -4.55
0.93
0.89
0.94
0.93
0.85
0.93
0.93
0.10
0.11
0.10
0.10
0.10
0.10
0.10
-7.03 -6.50 -6.50 -7.14 -6.34 -6.99 -7.06
1.44
1.29
1.39
1.43
1.68
1.44
1.44
-37.64
-1.05
0.27
-0.12
-0.003
0.001
470
470
470
470
470
470
470
0.94
0.94
0.94
0.94
0.94
0.94
0.94
1.81
1.82
1.81
1.82
1.80
1.81
1.81
62
Contributions to the change in the wage share,
advanced countries 1980/84-2000/04
6.0
4.0
2.0
FE
0.0
fin
glob
tech
wfst
diff
5yr
-2.0
GMM
-4.0
-6.0
-8.0
63