Reduction of the wage share of income and increasingly precarious employment

Abstract

The economic globalization that began in the late 1970s and early 1980s has generated job insecurity for workers. This coincides with two trends: a reduction in the wage share of income and increasingly precarious employment, both of which have been seen in most market economies since the early 1980s. This article proposes an efficiency-wage model in a demand-constrained equilibrium scenario, to explain how rising job insecurity has reduced the wage share of income and made employment more precarious. An additional virtue of this model is that it explains several features of the Mexican labour market observed in recent decades.