Labour’s declining share of national income in Ireland and Denmark: the national specificities of structural change

Abstract

The share of national income going to workers has decreased steadily across Europe since the 1980s. This apparently uniform decrease in labour’s share conceals differences amongst states however—in ‘liberal’ Ireland, this fall has been drastic, while that of ‘social democratic’ Denmark has been moderate. This article presents a parallel time series analysis of institutional and structural factors shaping labour’s share in Ireland and Denmark. Our results show that factors common to the study of variation in labour’s share operate in different ways in different countries, both in magnitude and causal mechanism. We find that stressors such as global trade, foreign investment and high-tech growth produce different effects in each location. Equally, protections such as unionization, leftist cabinets and welfare spending display contradictory effects in both locations. We conclude that ‘power resource’ models of labour share should be supplemented with comparative approaches that emphasize how institutionalized socio-political logics mediate returns to labour.