Full text: The political economy of income distribution: industry level evidence from Austria (156)

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obtain a negative impact of financial income in Denmark and of financial payments in Spain, 
albeit only for estimations applying the within estimator. However, in the UK, given the 
strong financial sector and the massive surge in household debt, financial payments and 
household debt both have a robust negative effect in all estimations using the within 
estimator, and these effects are mostly robust when estimated in first differences. All 
financialisation variables have a negative impact on the wage share in the US if the first 
difference estimator is applied.  
County level inequality, measured by the Gini coefficient has a negative effect in the 
UK and Germany, while we find it to be insignificant in France, the US, Italy and Spain. We 
obtain a perverse positive coefficient in Denmark.  
 
5.4 Estimation results for selected low wage countries 
We conduct similar estimations for selected low wage countries (Brazil, China, Indonesia, 
India, Korea, Mexico, Taiwan, Turkey), albeit using a slightly different dataset and 
estimation technique (for estimation results and further details please refer to Guschanski and 
Onaran, 2016 forthcoming). While our data for FDI, union density, household debt, the Gini 
coefficient, and social government spending comes from the same sources, we rely on the 
World Input-Output Database (Timmer, et al., 2015) for data on the wage share, capital stock, 
as well as intermediate imports and exports. Data on other variables which were used for the 
estimations for ‘high-wage’ OECD countries are not available. There are also slight 
differences in terms of the estimation methodology since, with sufficient number of cross 
sections our preferred estimator is the two-step system General Method of Moments (GMM) 
estimator.  
 Despite large differences between the institutional settings of the ‘low-wage’ country 
group in comparison to our core sample, we confirm the negative impact of globalisation. 
While we fail to find a statistically significant effect of total intermediate exports, we find a 
robust negative impact of intra-industry intermediate exports which is driven by exports to 
high wage countries. This variable measures exports from a particular industry in a ‘low-
wage’ country which are used by the same industry in a ‘high-wage’ country and thereby 
constitutes the other side of intra-industry ‘narrow’ outsourcing. Interestingly, this is at odds 
with standard trade theory, which suggests that while workers in ‘high-wage’, capital
        

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