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Rent‐Sharing and Workers' Bargaining Power: An Empirical Cross‐Country/ Cross‐Industry Panel Analysis
Author(s) -
Askenazy Philippe,
Cette Gilbert,
Maarek Paul
Publication year - 2018
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12228
Subject(s) - economic rent , bargaining power , economics , panel data , ordinary least squares , value (mathematics) , capital (architecture) , labour economics , microeconomics , instrumental variable , panel analysis , econometrics , empirical evidence , power (physics) , cross country , demographic economics , philosophy , archaeology , epistemology , machine learning , computer science , history , physics , quantum mechanics
In this paper, we study how rents are shared between capital and labour, using industry‐level panel data for 19 OECD countries from 1988 through to 2007. The first step is an explanation of the rent‐creation process. We provide evidence of a significant impact of regulation on value‐added prices at the industry level relative to the value‐added price for the overall economy (rent). In the second step, we dissect the value‐added sharing process. By running ordinary least‐squares and instrumental variables estimations, we obtain results that confirm the Blanchard–Giavazzi prediction: the impact of rents on the capital share depends on workers' bargaining power.