Development, globalization and the share of wages in value added.

Summary The central theme of this thesis is the impact of globalization and economic development on the sharing of value added between labor and capital incomes in both developing and developed countries. The first chapter focuses on the impact of economic development on the sharing of value added. It highlights the crucial role that the strong duality of the labor market can have in developing countries, where a formal sector, whose size is limited by entry costs and composed of relatively productive firms, coexists with an informal sector composed of less productive firms headed by individuals with low human capital. In such a context, labor market imperfections and frictions have important implications for the sharing of value added insofar as the typical worker is not paid at his marginal productivity and his external opportunities depend on the low-productivity informal sector. The second chapter focuses on the impact of foreign direct investment (FDI) on the sharing of value added in developing countries. The entry of FDI into developing countries corresponds to the meeting of two very different productive technologies in the same labor market. Thus the entry of foreign firms increases the productive heterogeneity of firms in these countries. When the labor market is frictional, this difference in productivity has strong implications for the sharing of value added insofar as the external opportunities of the worker hired by a foreign firm are largely located in local firms that produce relatively less. The impact of exchange rate crises - a recurrent phenomenon in economies that have liberalized their capital markets - on the sharing of value added is then addressed in the third chapter. Exchange rate crises have a very significant cost in terms of production. They also give rise to significant factor reallocations between different sectors of the economy. We examine the extent to which workers' bargaining power may be affected during this particular episode and what the impact of reallocation effects may be on the aggregate wage share. Finally, in the fourth chapter, we discuss the effects of wage rigidities on the sharing of value added in a global environment of factor cost determination. In such an environment, the elasticity of demand for labor is higher than in a closed economy, and wage rigidities lead to factor reallocations towards capital-intensive sectors for the countries that implement them. These reallocations can lead to a sharp fall in the wage share of value added, while increasing the wage share in countries that have not introduced rigidities. This theory can be compared with the very different experiences of continental European and Anglo-Saxon countries in terms of value added sharing.