<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Despite the fact that stability of labor share in national income is a key foundation in macroeconomic models, scientists acknowledge, that in the last three decades it has been declining around the world. The Baltic countries are not an exception; they follow similar patters to large economies, thus the research aims at determining economic factors at play. With the help of error correction model and time series data covering the past twenty years, we determine factors which contribute to the decline of labor share in the Baltic countries. We find significant long-term relationships between labor share and government spending, trade openness, and emigration. Government spending exhibits the highest contribution to variance of labor share in Lithuania, which also explains a large part of Latvia’s labor share variations. We find many similarities between the analyzed countries, however some differences are also visible.</p></abstract>

Despite the fact that stability of labor share in national income is a key foundation in macroeconomic models, scientists acknowledge, that in the last three decades it has been declining around the world. The Baltic countries are not an exception; they follow similar patters to large economies, thus the research aims at determining economic factors at play. With the help of error correction model and time series data covering the past twenty years, we determine factors which contribute to the decline of labor share in the Baltic countries. We find significant long-term relationships between labor share and government spending, trade openness, and emigration. Government spending exhibits the highest contribution to variance of labor share in Lithuania, which also explains a large part of Latvia’s labor share variations. We find many similarities between the analyzed countries, however some differences are also visible.

Labor Share in National Income: Implications in the Baltic Countries

Review of Economic Perspectives

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Labor Share in National Income: Implications in the Baltic Countries"}

Despite the fact that stability of labor share in national income is a key foundation in macroeconomic models, scientists acknowledge, that in the last three...

Labor Share in National Income: Implications in the Baltic Countries

Published Online: Jun 15, 2017

Page range: 121 - 139

Received: Oct 04, 2016

Accepted: Jan 25, 2017

DOI: https://doi.org/10.1515/revecp-2017-0006

Keywords
Baltic countries, income distribution, labor economics, labor share

© 2017 Aušra Razgūnė et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Labor Share in National Income: Implications in the Baltic Countries

Published Online: Jun 15, 2017

Page range: 121 - 139

Received: Oct 04, 2016

Accepted: Jan 25, 2017

DOI: https://doi.org/10.1515/revecp-2017-0006

KeywordsBaltic countries, income distribution, labor economics, labor share

© 2017 Aušra Razgūnė et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Baltic countries, income distribution, labor economics, labor share