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Globalization and the Labor Share in the United States

Author

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  • Juann H Hung

    (International Business School Suzhou, Xi’an Jiaotong-Liverpool University, No.111 Ren’ai Road, Dushu Lake Higher Education Town, Suzhou, Jiangsu Province, 215123, China)

  • Priscila Hammett

    (Whirlpool Corporation, 2000 N. M-63, Benton Harbor, MI 49022-2692)

Abstract

This paper examines to what extent globalization has contributed to the decline in the labor share of US national income. It argues that globalization can influence the national labor share (NLS), even though its impacts first occur to the tradable sector. It then empirically estimates the effect of globalization on the labor share in the manufacturing sector, and uses the resulting estimates to infer the effect of globalization on the NLS. Our estimations indicate that not all globalization indicators are negative on the labor share. However, between 1999 and 2009, the included indicators of globalization cut the manufacturing labor share by about 3–6 percentage points, directly contributing to about 20–36 percent of the decline in the NLS in that period. Moreover, that tally is very likely to underestimate the total effect of globalization on the US labor share because the paper’s estimates do not capture the indirect effect of globalization on the labor share of the non-tradable sector.

Suggested Citation

  • Juann H Hung & Priscila Hammett, 2016. "Globalization and the Labor Share in the United States," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 42(2), pages 193-214, March.
    • Handle: RePEc:pal:easeco:v:42:y:2016:i:2:p:193-214
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    Citations

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    Cited by:

    1. Zhang, Fan & Meng, Lei & Sun, Wen & Si, Yanwu, 2021. "Information technology and the labor market in China," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 156-168.
    2. Ibarra, Carlos A. & Ros, Jaime, 2023. "Trade and factor intensity, and the transmission of the global shock to labor: A panel analysis of the fall of the labor income share in the Mexican manufacturing sector," Economic Systems, Elsevier, vol. 47(1).
    3. Junhong Du & Chuanyue Zhao & Yingying Hu & Xiaohong Chen, 2024. "Impact of Industrial Robots on Labor Income Share: Empirical Evidence from Chinese A-Listed Companies," Sustainability, MDPI, vol. 16(16), pages 1-21, August.
    4. Wei, Xiahai & Jiang, Feng & Chen, Yu, 2023. "Who pays for environmental protection? The impact of green tax reform on labor share in China," Energy Economics, Elsevier, vol. 125(C).
    5. Hye‐Sung Kim & Youngchae Lee & Scott Huffmon, 2022. "Public opinion on U.S. investment in foreign countries: Survey evidence from 11 southern states in the United States," Social Science Quarterly, Southwestern Social Science Association, vol. 103(5), pages 1113-1124, September.
    6. Taining Wang & Jinjing Tian, 2020. "Recasting the trade impact on labor share: a fixed-effect semiparametric estimation study," Empirical Economics, Springer, vol. 58(5), pages 2465-2511, May.

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