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Has globalization shrunk manufacturing labor share in transition economies?

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  • Petreski, Marjan

Abstract

The objective of this paper is to investigate the nexus between the labor share and globalization in transition economies, with a reference to the skill intensity. We put these developments in the context of the structural and reform developments in transition economies. We rely on the predictions of the efficient bargaining model, whereby globalization forces are set to affect workers’ market bargaining power, which then produces certain developments in the labor share. We use industry-level data for 23 transition economies of Central and Southeast Europe and the Commonwealth of Independent States over the late transition period of 2000–2015. Results robustly suggest that globalization forces played important role for the stagnant labor shares in transition economies, mainly in low-skill industries. Workers’ shares in high-skill industries largely remained intact. Results further suggest that the negative effect has been the strongest for the low-skilled workers in the early transition phase and then lessened or vanished as countries turned a higher development stage. The key finding advises that if governments of transition countries attempted to or undertook steps to seize globalization by offering ‘cheap labor’, then it has been the wrong strategy.

Suggested Citation

  • Petreski, Marjan, 2021. "Has globalization shrunk manufacturing labor share in transition economies?," Journal of Comparative Economics, Elsevier, vol. 49(1), pages 201-211.
    • Handle: RePEc:eee:jcecon:v:49:y:2021:i:1:p:201-211
    DOI: 10.1016/j.jce.2020.07.010
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    Cited by:

    1. Marjan Petreski & Stefan Tanevski, 2023. "Bargain your share: The role of workers bargaining power for labor share, with reference to transition economies," Papers 2310.04904, arXiv.org.
    2. Marjan Petreski, 2022. "Minimum wage and manufacturing labor share: Evidence from North Macedonia," Finance Think Policy Studies 2022-02/41, Finance Think - Economic Research and Policy Institute.
    3. Riandy Laksono & Arianto A. Patunru, 2024. "The dynamics of labor share decline in manufacturing: Evidence from Indonesia," Departmental Working Papers 2024-3, The Australian National University, Arndt-Corden Department of Economics.
    4. Jianchun Fang & Giray Gozgor & James H. Nolt, 2022. "Globalisation, economic uncertainty and labour market regulations: Implications for the COVID‐19 crisis," The World Economy, Wiley Blackwell, vol. 45(7), pages 2165-2187, July.
    5. Cui, Guanghui & Zhang, Yi & Ma, Jingwen & Yao, Wenyun, 2023. "Does environmental regulation affect the labor income share of manufacturing enterprises? Evidence from China," Economic Modelling, Elsevier, vol. 123(C).

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    More about this item

    Keywords

    Labor share; Globalization; Skill intensity; Transition economies;
    All these keywords.

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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