Akademik Veri Yönetim Sistemi
İzlek Akademik Dergi, cilt.3, sa.2, ss.56-64, 2021 (Hakemli Dergi)
The inflation rate has been assumed as one of the core factors affecting the redistribution of income among different social strata. However, its effect on income distribution is rarely interacted by another variable. This paper investigates the implication of bargaining power indicators for workers on the relationship between inflation and income distribution (measured with labor share of income). The fixed effect is used to estimate balanced panel dataset which includes yearly data from 1980 to 2017 for selected 19 advanced economies. The estimates of inflation and bargaining power indicators show that an increase in inflation will unexpectedly increase the income shares accrued to labor and a higher degree of unionization will increase the labor’s share. However, the unemployment rate as considered another bargaining power indicator has some mixed results with statistically insignificant coefficients. Meanwhile, the positive effect of inflation will be mitigated by higher degree of unionization and unemployment rate, suggesting the existence of a mediating effect from the bargaining power indicators. Therefore, the economic authorities are advised to consider fallback options of workers as they may have either direct or indirect effects on income distribution through its interaction with inflation.