Labour’s declining share of national income in Ireland and Denmark: similar trends, different dynamics (NIRSA) Working Paper Series. No. 70.


Flaherty, Eoin and O Riain, Sean (2013) Labour’s declining share of national income in Ireland and Denmark: similar trends, different dynamics (NIRSA) Working Paper Series. No. 70. Working Paper. NIRSA - National Institute for Regional and Spatial Analysis. (Unpublished)

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Abstract

There can be few questions more fundamental to political economy than the share of national income that goes to capital and labour. The central organising concept of a division of factor shares between capital, labour and rent has long featured as an axiom of classical political economy in its derivations of essential heuristics of productive activity. Cross-national studies of income inequality, and of domestic labour market and macro-structural change have failed to adaquately account for the variable distribution of national product between labour and capital however, as an essential intermediary between personal income, and national economic activity. Labour’s share of income has declined almost universally among advanced capitalist economies under the apparent combined influences of globalisation, sectoral shifts in national employment, and the entrenchment of neoliberal policy regimes. Existing research into factor share distributions has failed to capture crucial differences in variability between countries however, differences which challenge existing stylised narratives emphasising stable compensation rates, which call for a case-sensitive orientation to the manner in which heterogeneous configurations of state and labour market institutions mediate the distribution of returns to labour and capital. This paper presents a contextualised, case-centered approach to the comparative analysis of the dynamics of labours’ share of national income, based on parallel time series analyses of institutional and structural covariates in Ireland and Denmark – cases examplary of the influential ‘varieties of capitalism’ and ‘worlds of welfare capitalism’ heuristics. The results of a set of time series models show that the institutional configurations defined by the interaction of national economic composition, levels of unionisation, globalisation, labour market change and financialisation, construct evolving national contexts of institutional complementarity and conflict, which in turn mediate the dynamics of the distribution of returns to labour and capital. Consequently, oberved cross-European declines in aggregate labour shares must be understood both in terms of an historical complexity which transcends the limitations of the conventional typologies of comparative political economy, and in a manner which confronts the heuristics of macro-economics, which empahsise constant returns to scale.

Item Type: Monograph (Working Paper)
Keywords: Labour; national income; Ireland; Denmark; similar trends; different dynamics;
Academic Unit: Faculty of Social Sciences > Research Institutes > National Institute for Regional and Spatial analysis, NIRSA
Faculty of Social Sciences > Sociology
Item ID: 5419
Depositing User: Prof. Sean O Riain
Date Deposited: 24 Sep 2014 14:56
Publisher: NIRSA - National Institute for Regional and Spatial Analysis
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