Daudey, Emilie and Decreuse, Bruno (2006): Higher education, employers’ monopsony power and the labour share in OECD countries.
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This paper examines the impact of higher education on the labour share. It is based on the following idea: as education offers adaptability skills, it should reduce employers’ monopsony power and, therefore, increase the labour share. This idea is developed in a two-sector model with search unemployment and wage competition between employers to attract/keep workers. Using panel data for eleven OECD countries, we show that the proportion of higher educated in the population has a significant positive effect on the labour share: typically, an increase of one standard deviation in higher education induces a three point increase in the labour share. The other determinants of the labour share are compatible with the theoretical model. They include the capital-output ratio (-), minimum to median wage ratio (+), union density (+). We also find that the unemployment rate has a negative and significant impact on the labour share, which, together with the positive impact of higher education, is incompatible with a three-factor model where factors are paid their marginal products.
|Item Type:||MPRA Paper|
|Original Title:||Higher education, employers’ monopsony power and the labour share in OECD countries|
|Keywords:||Search frictions; Adaptability; Labour share; Macroeconomic panel data|
|Subjects:||J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J60 - General
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution
I - Health, Education, and Welfare > I2 - Education and Research Institutions > I20 - General
|Depositing User:||Bruno Decreuse|
|Date Deposited:||19. Jun 2007|
|Last Modified:||12. Feb 2013 16:02|
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