Factors influence on labor share decline

This study discusses the factors of influence on labor share decline in Taiwan from the aspect of technological change, globalization, bargaining power and financialization. This study uses the capital-labor ratio, openness, union density, unemployment benefit generosity, unemployment rate, foreign direct investment, inward direct investment and derivative financial asset as the variables for technological change, globalization, bargaining power and financialization based on the quarterly data during 1999 to 2013. The analysis is performed by means of the method of the ordinary least squares (OLS). The empirical results show that all the variables have influence on labor share except union density and FDI. Therefore, we should carry out significant reforms in fiscal policy, financial market policy and labor market policy in order to balance the situation with uneven labor share.