This paper develops a model of distribution to analyze the effects of neoliberal globalization on labor in the developing countries. Distribution is determined via wage bargaining by workers, price setting by firms, and improvements in productivity. The full model has the nature of a Post-Keynesian conflicting claims model for an open economy under the pressure of globalization. The conflict inflation is extended to an open economy case with imported inputs, where the pass through effect of the depreciation of the local currency also becomes important. The variables that reflect the macroeconomic effects of globalization are modeled as parameters that affect the bargaining power of labor on two levels: the first group is related with the interaction with the global economy, i.e. international trade, and FDI. The second is about the domestic fiscal and monetary policy variables, which are particularly related to the specific form that globalization takes in the era of neoliberalism, i.e. government expenditures, and the interest rate. Then the model is solved for distribution of income, i.e. the wage share, thus a reduced form of the model is obtained, which is estimated in a companion paper to test whether the change in the international and domestic macroeconomic environment has affected the decline the labor's share. (author's abstract) / Series: Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness"

The aim of this paper is to discuss the outcomes of neoliberal globalization from the perspective of labor in the developing countries, with a particular emphasis on the crises that followed the substantial liberalization in capital accounts in the 1990s. Although a lot has been said about the effects of capital account liberalization on the macroeconomic performance of the economies, less attention is paid to the different effects on labor vs. capital. This paper analyses the outcomes of neoliberal globalization for labor in nine developing countries, and focuses on the episodes of crisis as part of the general class struggle where the question on who will carry the burden of adjustment is a part of the struggle. The paper describes the corner stones of the regime of growth in the neoliberal era, by analyzing the trends in growth, investment, unemployment, and labor's share in income, and discusses the effects of the shocks generated by crises on these variables. We empirically test whether the lower wage share has had any effect on unemployment, as the neoclassical theory claims, or whether unemployment is primarily driven by the goods market conditions a la Keynes. An empirical analysis about the cyclical behaviour of labor's share is carried on to understand whether the crises episodes change the effect of demand on distribution. Since the source of growth can also be important on how the generated output is distributed, we also discuss the effects of investment performance on labor's share. Then we proceed with an analysis of the specific consequences of economic policy choices on distribution, in terms of exchange rate and fiscal policies. Finally we discuss the core stones of an alternative policy framework. (author's abstract) / Series: Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness"