Comparative Economic Studies

, Volume 59, Issue 1, pp 55–76

Labour and Financial Crises: Is Labour Paying the Price of the Crisis?

Original Article


This paper investigates the relationship between the labour share and financial crises. While Diwan (2001) or Maarek et al. (2013) focused on the currency crisis, we propose to see if their analyses can be extended to the banking crisis and how it can influence the relative bargaining power of labour and capital within firms. To this end, we use international panel data of the share of labour in GDP. We confirm the existence of a negative trend for the labour share, which is largely explained by financial crises. However, the results differ for currency and banking crises. Currency crises affect the labour share negatively, while banking crises primarily affect capital income, at least during the year of the crisis. In the three years following a currency crisis, the labour share tends to be reduced by around 2% per year on average.


labour share banking crises currency crises 

JEL Classification

E25 E44 G01 

Copyright information

© Association for Comparative Economic Studies 2017

Authors and Affiliations

  1. 1.Univ. Paris 1 Panthéon-SorbonneParisFrance
  2. 2.Centre d’Economie de la Sorbonne (CES, UMR CNRS 8174)Paris cedex 13France
  3. 3.Université Paris-Est, ERUDITE, TEPPCreteilFrance

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