Declining labor shares and bargaining power: An institutional explanation

Bental, Benjamin; Demougin, Dominique

doi:10.1016/j.jmacro.2009.09.005

Cited by 82 publications

(74 citation statements)

References 31 publications

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“…In a first step, I show that data trends for the labor share, wages in efficiency units, and labor in efficiency units over capital can be matched by a simulation of the model of Bental and Demougin (2010). In a second approach, I confirm increasing monitoring of workers using micro data for Germany.…”

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confidence: 84%

“…The labor saving aspect originates from a substitutability of ICT with labor. Bental and Demougin (2010) propose another channel through which ICT affects the labor share. In their model, ICT innovations enable more efficient monitoring of workers.…”

Section: Introductionmentioning

confidence: 99%

“…With higher monitoring precision, the workers' rents can be reduced at every level of effort, which consequently lowers the labor share. The aim of this paper is to assess the model and the resulting hypotheses of Bental and Demougin (2010) against real world data. Bental and Demougin (2010) explain the decreasing labor share by an institutional model where the downward movements the labor share, wages relative to productivity and effective labor relative to capital, are caused by an improvement in monitoring technology.…”

Section: Introductionmentioning

confidence: 99%

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confidence: 99%

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Monitoring, Information Technology and the Labor Share

Schneider¹

2011

SSRN Journal

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This paper assesses empirically the hypotheses by Bental and Demougin (2010) that innovations in ICT (Information and Communication Technology) reduce the labor share in OECD countries by improving the monitoring technology. In a first step, I show that data trends for the labor share, wages in efficiency units, and labor in efficiency units over capital can be matched by a simulation of the model of Bental and Demougin (2010). In a second approach, I confirm increasing monitoring of workers using micro data for Germany. I argue that ICT influences labor not only through substitutability of labor with ICT and foreign work, but also through to lowering rents of workers as monitoring technology improves.

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confidence: 84%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Monitoring, Information Technology and the Labor Share

Schneider¹

2011

SSRN Journal

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“…Guscina (2006) uses union density and a variable measuring the strictness of employment protection in the regressions and finds positive effects on labor's share. Bental and Demougin (2010) establish a model with moral hazard and irreversible investment that affect the bargaining power of labor and suggest that the improvements in ICT technologies weaken the bargaining power of labor thus has a negative effect on labor's share. Agnese and Sala (2010) finds that deunionization accounts for 8 percentage points of the decline in Japan's labor share since 1990.…”

Section: Recent Studiesmentioning

confidence: 99%

The Labor Share Question in China

Qin¹

2014

Mon. Rev.

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Effects of monetary policy on the skill premium and the growth rate in a directed technical change model with heterogeneous cash‐in‐advance constraints

Afonso

Lima

2022

Int. J Fin Econ

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This article analyses the balanced‐growth‐path effects of monetary policy (inflation) on the skill premium and the growth rate in the context of a directed technical change model with cash‐in‐advance (CIA) constraints specific to the unskilled and skilled sectors. Calibrating the model using data from 36 countries, the presence of more stringent CIA constraints in the unskilled sector, as supported by the literature, causes inflation to have a positive effect on the skill premium. Moreover, it also increases the negative impact of inflation on the growth rate in relation to the baseline scenario of homogeneous CIA constraints. A lower labour share and higher inflation in general magnify these effects on both variables while a relative lower importance of the unskilled sector does the opposite with respect to the skill premium. Therefore this article innovates in three important ways: (i) we add an additional channel through which inflation affects inequality; (ii) we highlight the importance of avoiding ignoring differences of liquidity constraints across the economy in the context of endogenous growth models to not underestimate the negative long‐run impacts of inflation; (iii) the results suggest that developing countries that have difficulty in achieving price stability in the long‐run can mitigate the negative effects of inflation by reducing constraints faced by the unskilled sector and promoting the development of the skilled sector.

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Declining labor shares and bargaining power: An institutional explanation

Cited by 82 publications

References 31 publications

Monitoring, Information Technology and the Labor Share

Monitoring, Information Technology and the Labor Share

The Labor Share Question in China

Effects of monetary policy on the skill premium and the growth rate in a directed technical change model with heterogeneous cash‐in‐advance constraints

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