Democracy and the Labor Share of Income: A Cross-Country Analysis
Guerriero, Marta | January 2019
Abstract
Summary statistics on the labor share of income show that between-country variation is much greater than within-country variation: functional income distribution is determined by factors which change substantially across countries but are persistent over time. This article attempts to shed some light on the long-run and political economy determinants of the labor income share. We revisit and extend previous empirical research on democratic political institutions and the labor share using a dataset of 112 countries over the period 1970-2015. Our empirical analysis shows that democracy allows workers to appropriate a higher share of national income. The evidence is robust to different indices of democracy and different periods of time, and after performing instrumental variable estimation. These results are particularly relevant today, in light of the recent global decline in the labor income share and current crisis of democracy.
Citation
Guerriero, Marta. 2019. Democracy and the Labor Share of Income: A Cross-Country Analysis. © Asian Development Bank Institute. http://hdl.handle.net/11540/9623.Keywords
Economic Crisis
Economic Efficiency
Economic Policies
Regional Economic Development
Job Evaluation
Evaluation
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Economic Welfare
Economic Incentives
Economic Efficiency
Economies in transition
Economic agreements
Social condition
Economic dependence
Economic assistance
Crisis
Unemployment
Economic cooperation
Gross domestic product
Employment
Economic forecast
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Financial crisis
Labor economics
Regional economics
Turnover
Economic survey
Job analysis
Labor turnover
International relief
Exports
Economic development projects
Economic policy
Economic forecasting
Wages and labor productivity
Labor economics
Regional economics
Turnover
Economic survey
Efficiency wage theory
Income Distribution
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