Full text: Wirtschaft und Gesellschaft - 2016 Heft 4 (4)

42. Jahrgang (2016), Heft 4

Wirtschaft und Gesellschaft

wage share of low skilled domestic workers and increasing it for high
skilled workers. Furthermore, vertical FDI potentially induce downward
pressure on wages as foreign workers can be argued to increase labour
demand at lower wage rates. This channel is most likely to impact both
skilled and unskilled workers alike. Horizontal, or market-seeking FDI can
also have a negative effect to the extent that it replaces exports. More
likely though it will have a positive effect for high skilled workers because of
an increase in employment at headquarters situated in the home country.44 Generally, we expect these effects to be less pronounced in services
because of their non-tradable character.
Furthermore we test the robustness of our results with regard to globalisation with country-level variables like the KOF globalisation index supplied by Dreher (2006) and Dreher, et al. (2008). These controls, which are
important because the variable constitutes an exogenous measure of
globalisation, strongly confirm our results with sector level variables.45
Our final variable accounting for trends in globalisation is the share of migrant workers in total employment. Previous findings suggest the effect of
migration on the wage share to be negligible.46 Theoretically, it can be either positive or negative depending on whether foreign workers complement domestic workers and thereby increase productivity or replace domestic workers while receiving a lower wage (or lower social security
BARGAINING is a set of variables related to the industrial relations and
labour market institutions including union density (alternately at the country and sector level) and adjusted collective bargaining coverage at the
country level. While union density measures “potential union bargaining
pressure”, “the effectiveness of unions in providing and defending minimum standards of income and employment” is argued to be better captured by bargaining coverage defined as employees covered by collective
(wage) bargaining agreements as a proportion of all wage and salary earners in employment with the right to bargaining.47 Furthermore we experimented with a measure of minimum wages as a ratio to the sectoral average wage as well as the growth rate of real minimum wages. Theoretically,
an increase in any of those measures is expected to increase the real
wage which will lead to an increase in the wage share if the elasticity of
substitution between capital and labour is less than unity.
FINANCIALISATION includes interest and dividend payments and income as a ratio to total resources of nonfinancial corporations, as well as
household debt as a share of GDP at the country level. There are different
channels through which financialisation is said to impact the wage share.
Post-Keynesian literature emphasises the effect of financial payments of
non-financial corporations and relate it to an increase in the mark-up of
employers if the latter is cost-sensitive with respect to financial pay571

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