Three essays on empirical patterns in functional distribution for a cross-section of countries: Evidence from the Extended Penn World Tables, 1963--1996

This dissertation examines empirical patterns of functional distribution for a cross section of countries over the period 1963–1996 using the Extended Penn World Tables (EPWT) database. Essay 1 shows that beginning on or around 1979 a structural break in functional distribution occurred internationally which we characterized as two different regimes of distribution. In the first regime real wages were elastic and in the second regime real wages were inelastic, both with respect to labor productivity. A simple test for structural change was conducted for each country in the study. Essay 2 uses the recent techniques of convergence analysis and shows that in the first distributive regime wage shares and real wages converged whereas in the second regime they diverged. The evidence of divergence is taken as an indication of the increased instability in international relations of distribution occurring in the waning years of the twentieth century. Essay 3 examines the impact globalization may have had on the convergence (or lack thereof) in factor prices for advanced economies. It challenges the conclusions reached by some trade theorists and economic historians who argue via the Heckscher-Ohlin-Samuelson framework that convergence in factor prices is a result of increased globalization. Specifically this essay shows that convergence in globalization did in fact occur across the entire sample for the 15 advanced economies but that convergence in factor prices ceases and indeed reverses on or around the breakpoint year of 1979.