|
dependent variable: |
income |
labour share |
p90/p10 |
unemployment |
|
labour share at market price |
-0.723 | |||
|
[4.25]*** | ||||
|
p90/p10 decile ratio |
7.389 | |||
|
[3.50]*** | ||||
|
unemployment rate |
0.294 | |||
|
[2.05]** | ||||
|
unemployment benefit |
-5.593 |
7.864 |
-0.426 |
5.771 |
|
[1.35] |
[2.20]** |
[1.47] |
[1.34] | |
|
union density rates |
1.862 |
-2.005 |
23.406 | |
|
[0.45] |
[6.05]*** |
[4.59]*** | ||
|
ratio minimum/median wage |
3.437 |
-3.505 |
41.527 | |
|
[0.58] |
[7.38]*** |
[6.50]*** | ||
|
log capital per worker |
22.136 |
0.289 |
13.821 | |
|
[5.71]*** |
[0.90] |
[3.12]*** | ||
|
average years of education |
-7.783 |
-0.104 | ||
|
[5.06]*** |
[0.83] | |||
|
log oil price in national currency |
-2.567 | |||
|
[2.88]*** | ||||
|
tax wedge |
-36.702 | |||
|
[5.94]*** | ||||
|
time trend |
0.136 |
0.058 |
-2.687 | |
|
[0.10] |
[0.53] |
[1.67]* | ||
|
Constant |
yes |
yes |
yes |
yes |
|
Country fixed effects |
yes |
yes |
yes |
yes |
|
Year fixed effects |
yes |
______yes______ |
yes |
_______yes______ |
|
Observations |
135 |
135 |
135 |
135 |
|
Root mean squared error |
1.3 |
1.06 |
0.08 |
1.31 |
|
R2 |
0.96 |
0.94 |
0.99 |
0.81 |
Controls for changes in definition included.
We now consider the alternative strategy of estimating the simultaneous equation system defined
by equations (18), (19), (20) and (21) through three-stage least squares. The estimated coefficients are
reported in table 6.21 Previous results are confirmed: our three endogenous variables (the labour share,
wage differential and unemployment rate) are correlated with income inequality, whereas the
unemployment benefit exerts its impact only indirectly, through the labour share. The equation for the
determination of the labour share is consistent with what we have already found in least square estimation
(table 2), including country and year fixed effects. Similarly, for the wage differential the pressure for wage
compression deriving from union presence and/or from minimum wage legislation is consistent with the
OLS estimates reported in table 3, even if capital accumulation and unemployment benefit loose
21 Note that sample size declines from 210 to 135 observations, because we cannot use the extended series for the
wage differential.
21