The Labor Share Squeeze in Latin America: A Dynamic Heterogeneous Approach

This paper analyzes the long-run relationship between labor share and its determinants for 20 Latin American countries from 1980 to 2014. Using the pooled mean group estimator, we find evidence that technological change, the globalization process, and financial integration, have contributed to the d...

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Bibliographic Details
Published in:Global economy journal 2018-06, Vol.18 (2)
Main Authors: Joy, Ryan, Rodriguez, Cesar M., Ruprah, Inder J.
Format: Article
Language:English
Subjects:
capital-output ratio
E24
E25
Economic models
F55
Globalization
Government spending
H80
Informal economy
labor share
Latin America
pooled mean group estimation
Technological change
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Summary:This paper analyzes the long-run relationship between labor share and its determinants for 20 Latin American countries from 1980 to 2014. Using the pooled mean group estimator, we find evidence that technological change, the globalization process, and financial integration, have contributed to the decline of labor share in Latin America. We also find evidence of the importance of institutional factors and public spending for the labor share. Finally, we discuss the role of the informal sector on the dynamics of the decline. Our key findings are robust to various specifications and methodologies.
ISSN:2194-5659
1553-5304
DOI:10.1515/gej-2017-0083