Citation

Discussion Paper Details

Please find the details for DP6348 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Privatization, Entry Regulation and the Decline of Labour's Share of GDP: A Cross-Country Analysis of the Network Industries

Author(s): Ghazala Y. Azmat, Alan Manning and John Van Reenen

Publication Date: June 2007

Keyword(s): Entry Regulation, Labour share, Privatization and Wages

Programme Area(s): Labour Economics

Abstract: Labour's share of GDP in most OECD countries has declined over the last two decades. Some authors have suggested that these changes are linked to deregulation of product and labour markets. To examine this we focus on a large quasi-experiment in the OECD: the privatization of many network industries (e.g. telecommunications and utilities). We present a model with agency problems, imperfect product market competition and worker bargaining which makes clear predictions on how the labour share, employment and wages respond to privatization and other regulatory changes. We exploit cross-country panel data on several network industries and find that privatization can account for a significant proportion of the fall of labour's share (a fifth overall, but over half in Britain and France). The impact of privatization has been offset by falling barriers to entry, which consistent with theory, dampens profit margins.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6348

Bibliographic Reference

Azmat, G, Manning, A and Van Reenen, J. 2007. 'Privatization, Entry Regulation and the Decline of Labour's Share of GDP: A Cross-Country Analysis of the Network Industries'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6348