Examining the Influence of Taxation and Trade Liberalization on Labour Income Share Across ASEAN-5 Countries: Evidence from PMG-ARDL Approach

Research on the trend of labour income share has been gaining a lot of attention recently. However, most studies have primarily focused on advanced economies and high-income countries. This research seeks to expand the existing literature by exploring the association between labour income share and several factors, including taxation, trade liberalization, GDP growth, inflation and labour force participation, within the emerging economies of ASEAN-5 countries. This study utilizes data from 2008 to 2022 and employs an autoregressive distributed lag model, which enables both short-term dynamics and long-term equilibrium relationships. Additionally, causal connections were also examined using the Dumitrescu–Hurlin panel causality test. The findings suggest a negative and significant relationship between labour income share and tax revenue, inflation and GDP growth. Conversely, trade openness and labour force participation positively influence labour income share. In addition, a two-way causality between taxation and labour income share was detected, along with causal effects of GDP growth and inflation on labour income share. Consequently, this study offers relevant insights for policymakers to devise fiscal, trade and labour policies that could help in promoting an equitable income distribution while also contributing to the literature regarding labour income share, specifically in emerging countries.

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Publication Details

Journal
Management and Labour Studies
Published
2026-09-06
DOI
https://doi.org/10.1177/0258042x261479582
Primary Topic
Taxation and Compliance Studies
Type
article
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article

Examining the Influence of Taxation and Trade Liberalization on Labour Income Share Across ASEAN-5 Countries: Evidence from PMG-ARDL Approach

Assis Kamu, Vallerie Peter
Management and Labour Studies
Taxation and Compliance Studies
article

Examining the Influence of Taxation and Trade Liberalization on Labour Income Share Across ASEAN-5 Countries: Evidence from PMG-ARDL Approach

Assis Kamu, Vallerie Peter
article en

Abstract

Research on the trend of labour income share has been gaining a lot of attention recently. However, most studies have primarily focused on advanced economies and high-income countries. This research seeks to expand the existing literature by exploring the association between labour income share and several factors, including taxation, trade liberalization, GDP growth, inflation and labour force participation, within the emerging economies of ASEAN-5 countries. This study utilizes data from 2008 to 2022 and employs an autoregressive distributed lag model, which enables both short-term dynamics and long-term equilibrium relationships. Additionally, causal connections were also examined using the Dumitrescu–Hurlin panel causality test. The findings suggest a negative and significant relationship between labour income share and tax revenue, inflation and GDP growth. Conversely, trade openness and labour force participation positively influence labour income share. In addition, a two-way causality between taxation and labour income share was detected, along with causal effects of GDP growth and inflation on labour income share. Consequently, this study offers relevant insights for policymakers to devise fiscal, trade and labour policies that could help in promoting an equitable income distribution while also contributing to the literature regarding labour income share, specifically in emerging countries.

Management and Labour Studies
Universiti of Malaysia Sabah (MY)
Decent work and economic growth
Openalex Percentile: Top 5%
Taxation and Compliance Studies
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