2015/25 | LEM Working Paper Series | |
![]() |
||
Where does the surplus go? Disentangling the capital-labor distributive conflict |
||
Francesco Bogliacino, Dario Guarascio, Valeria Cirillo |
||
Keywords | ||
![]() |
![]() |
|
rent; surplus; distribution; inequality; offshoring; R&D
| ||
JEL Classifications | ||
![]() |
![]() |
|
O33, F15, J31
|
||
Abstract | ||
![]() |
![]() |
|
The evidence on growing inequality in OECD countries has raised an
important debate over its main drivers, pointing out an increasing
importance of the capital-labour conflict. In this contribution, we
aim at disentangling the role of some of the forces shaping this
process. Our identification strategy relies on the sequential nature
of wage setting and profits realization, in line with theoretical
insights from the range theory of wages (postulating rents sharing at
the shop floor level) and the principle of effective demand. In
particular we focus on the role of technology and offshoring as
instruments to create surplus and to shape the bargaining power of the
parties involved in wage setting, and on different sources of demand
as heterogeneous determinants of profits realization. The empirical
analysis is performed on a panel of 38 manufacturing and service
sectors over four time periods from 1995 to 2010, covering Germany,
France, Italy, Spain, and United Kingdom. The contrasting effects of
R&D and offshoring emerge as determinants of wages. Investment and
internal demands are key variables in the realization of profits. When
we look at the heterogeneity of the effects we see three main stylized
facts. First of all, distinguishing for technological domain using
Pavitt classes we can see that rents are effectively related with
upgraded industries. Secondly, when we distinguish for the degree of
openness we can see that, again, rents are mainly shared in open
industries. Finally, when we disentangle the effect on wages per skill
level, it is possible to confirm the intuition that offshoring hits
the medium-low skill categories.
|
||
![]() |
![]() |
|
|
||
![]() | ||
![]() |