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Technology, Market Regulations, and Labor Share Dynamics

  • Mary O’Mahony
  • Michela Vecchi
  • Francesco VenturiniEmail author
Chapter
Part of the ADB Institute Series on Development Economics book series (ADBISDE)

Abstract

We investigate the causes of the decline in the labor share, exploring the effect of technology vis-à-vis the role of market regulations, namely employment protection legislation, product market regulation, and intellectual property rights (IPR) protection. Our results show that, in the long run, productivity upgrades and information and communication technology capital diffusion are major sources of the decline in the labor share. IPR protection is the only dimension of the institutional setting that affects (positively) the share of industry income accruing to labor. Our results also show that hysteresis characterizes the dynamics of the labor share in all countries. This further corroborates the idea that institutional differences are not the main source of variation in labor share movements, as the negative trend is common to countries with different regulatory settings.

Keywords

Labor share Technological change ICT capital Market regulations Hysteresis 

JEL Classification

C23 E24 E25 O33 

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Copyright information

© Asian Development Bank Institute 2019

Authors and Affiliations

  • Mary O’Mahony
    • 1
  • Michela Vecchi
    • 2
  • Francesco Venturini
    • 3
    Email author
  1. 1.King’s CollegeLondonUK
  2. 2.Middlesex UniversityLondonUK
  3. 3.University of PerugiaPerugiaItaly

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