Labour's share, market structure and trade unionism

Abstract

Using British manufacturing data this paper tests Kalecki's degree of monopoly theory of the determination of factor incomes. The paper demonstrates how both product market structure, captured by the live firm concentration ratio, and trade unionism, measured by collective bargaining agreements, shape production worker wage share. We report estimates in which it emerges that there is an important role for seller concentration in influencing wage share, but the estimated trade union coverage results are less robust. Our tests reveal that once idiosyncratic industry effects and accounted for the union effect on wage share disappears.