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

42. Jahrgang (2016), Heft 4

Wirtschaft und Gesellschaft

nomic significance, the decline in the wage share in Austria is most
strongly driven by a deterioration of bargaining power as captured by union
density and different measures of financialisation. However, the most relevant institutional variables differ considerably across countries, lending
support to our approach of country specific estimations.
Our findings have important policy implications. Rising inequality is not
an inevitable outcome of technological change. Tackling income inequality
requires a restructuring of the institutional framework in which bargaining
takes place and a levelled play-ground where the bargaining power of labour is more in balance with that of capital. The impact of globalisation is
likely to be significantly moderated or offset by stronger bargaining power
of labour via an improvement in union legislation, increasing the coverage
of collective bargaining, increasing the social wage via public goods and
social security and international labour standards embedded in a broader
strategy of global cooperation for high road labour market policies and
macroeconomic policy coordination. Each country would have to address
specific issues supporting the strongest positive drivers of the wage share
while mitigating factors that reduce workers’ bargaining power. Furthermore, our results suggest that a simple attempt to reduce income inequality through skill-upgrading will not work as skill-biased technological
change does not seem to be the most relevant factor determining the distribution between labour and capital.
Endnotes
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Atkinson, Piketty and Saez (2011).
The time period is determined by data availability at a detailed sectoral level.
More detailed results and discussion on countries other than Austria can be found in
Guschanski and Onaran (2016a).
Stockhammer (2009).
EC (2009).
Kaldor (1955).
Kalecki (1954); Hein (2015).
Country-level analysis always faces the question as to whether the decline in the wage
share captures changes in sectoral composition rather than a simultaneous decline of
the wage share in all sectors; therefore, in order to abstract from mere reallocation effect
and focus on a distributional analysis it is crucial to isolate the within sector development
of the wage share. This can be illustrated simply by writing the aggregate wage share as
a function of weighted sectoral wage shares (EC [2009]):
n
LCC
VAi, t LCi, t
t
Eq. (1)
WSC
=∑
∗
t =
C
VAi, t
VAt i =1 VAC
t
where i stands for the sector and t for the year. WSC
t stands for the aggregate wage
share of country C, which is defined by labour compensation LCC
t as a ratio to total
)
or
GDP,
and
can
be
expressed
as
the
sum of within sector
domestic value added (VAC
t
LC
VA
wage shares VAii,,tt weighted by the sectors’ contribution to total value added iC, t . ConseVAt

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