European Parliament Library

Technological Changes, Offshoring, and the Labor Share, Weicheng Lian

Abstract
Existing studies on the downward trend in the labor share of income mostly focus on changes within individual countries. I document, however, that half of the global decline in the labor share of income can be traced to the relocation of activities between countries. I develop a two-country model to show that when the relative price of investment goods falls, production activities with a small elasticity of substitution between capital and labor tend to get offshored from high- to low-wage countries. The model provides an explanation as to why such relocation may drive the labor share down in both developed and developing economies, as well as globally
Language
eng
Literary Form
non fiction
Physical Description
1 online resource (58 pages).
Specific Material Designation
remote
Form Of Item
online
Isbn
9781498325660

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