Labor's Share, the Firm's Market Power, and Total Factor Productivity PDF Download

Author: Robert John Dixon
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
We investigate the relationship between labor's share, firm's market power, and the elasticity of output with respect to labor input using an approach based on an unobserved components model. The approach yields time-varying estimates of market power and the elasticity. Evidence on the market power of firms (which we find to be rising since 2000) gives a deeper understanding of movements in labor's share and the labor wedge. The generated values of the elasticity yield revised estimates of total factor productivity growth which is informative about the extent of the downward bias inherent in traditional estimates which use labor's share as a proxy for the elasticity.

Author: Agustin Velasquez
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 41

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Book Description
The labor share has been declining in the United States, and especially so in manufacturing. This paper investigates the role of capital accumulation and market power in explaining this decline. I first estimate the production function of 21 manufacturing sectors along time series and including time-varying markups. The elasticities of substitution for most sectors are estimated below one, implying that capital deepening cannot explain the labor share decline. I then track the long-run evolution of the labor share using the estimated production technology parameters. I decompose aggregate labor share changes into sector re-weights, capital-labor substitution, and market power effects. I find that the increase in market power, as reported in recent studies, can account for, at least, 76 percent of the labor share decline in manufacturing. Absent the rise in market power, the labor share would have remained constant in the second half of the 20th century.

Author: Sónia Félix
Publisher:
ISBN:
Category :
Languages : en
Pages : 34

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Book Description
We use matched employer-employee data and firm balance sheet data to investigate the importance of firm productivity and firm labor market power in explaining firm heterogeneity in wage formation. We use a linear regression model with one interacted high dimensional fixed effect to estimate 5-digit sector-specific elasticity of output with respect to input factors directly from the production function. This allows to derive firm specific price-cost mark-up and elasticity of labor supply. The results show that firms possess a considerable degree of product and labor market power. Furthermore, we find evidence that firm's monopsony power affects negatively the earnings of its workers and firm's total factor productivity is considerably associated with higher earnings, ceteris paribus. We also find that firms use monopsony power for wage differentiation between male and female workers.

Author: Saumik Paul
Publisher: Palgrave Macmillan
ISBN: 9789811568626
Category : Business & Economics
Languages : en
Pages : 281

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Book Description
This book is about labor income share, which measures the share of national income paid in wages. The global share of income going towards labor is declining, which suggests a more unequal distribution of income. This has sparked debates about fair distribution of personal incomes among academics and policymakers alike. This book joins the discussion by bringing together recent developments in theoretical and empirical research on labor income share and novel insights on the measurement of the labor income share. The aim of this book is to help design policies to reduce inequality and provide useful knowledge to academics, policymakers from government agencies, policy aides in research institutions and think tanks, and broader audiences from public and private organizations.

Author: Robert John Dixon
Publisher:
ISBN:
Category :
Languages : en
Pages : 39

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Book Description
In this paper we investigate the relationship between labor's share, the market power of firms and the elasticity of output with respect to labor input using an approach based on an unobserved components model. The approach yields time-varying estimates of the market power and the elasticity. Evidence on the evolution of the market power of firms contributes to a deeper understanding of movements in labor's share and of the firm's contribution to the labor wedge. The generated values of the elasticity also yield revised estimates of US TFP growth which is informative about the (non-trivial) bias inherent in traditional estimates of TFP growth which use the wage share as a proxy for the elasticity.

Author: David Weil
Publisher: Harvard University Press
ISBN: 067472612X
Category : Business & Economics
Languages : en
Pages : 421

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Book Description
In the twentieth century, large companies employing many workers formed the bedrock of the U.S. economy. Today, on the list of big business's priorities, sustaining the employer-worker relationship ranks far below building a devoted customer base and delivering value to investors. As David Weil's groundbreaking analysis shows, large corporations have shed their role as direct employers of the people responsible for their products, in favor of outsourcing work to small companies that compete fiercely with one another. The result has been declining wages, eroding benefits, inadequate health and safety protections, and ever-widening income inequality. From the perspectives of CEOs and investors, fissuring--splitting off functions that were once managed internally--has been phenomenally successful. Despite giving up direct control to subcontractors and franchises, these large companies have figured out how to maintain the quality of brand-name products and services, without the cost of maintaining an expensive workforce. But from the perspective of workers, this strategy has meant stagnation in wages and benefits and a lower standard of living. Weil proposes ways to modernize regulatory policies so that employers can meet their obligations to workers while allowing companies to keep the beneficial aspects of this business strategy.

Author: Julio Rotemberg
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 64

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Book Description
Hall has pointed out that, when there is perfect competition and price flexibility, labor hoarding alone will not induce the Solow residual measured using labor's share in revenues to be procyclical. We show that, even with perfect competition, a small amount of price rigidity - we assume firms must set price slightly before the level of demand becomes known - makes the extent of procyclical productivity depend mainly on the extent of labor hoarding. We show that indeed, whether productivity is measured via the Solow method using labor's share in revenues or using other methods, it tends to be more procyclical in industries and in nations where labor hoarding is more important.

Author: Lynn H. Foley
Publisher: Taylor & Francis US
ISBN: 9781402073540
Category : Business & Economics
Languages : en
Pages : 294

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Book Description
In recent years, economic prognosticators have pondered whether the U.S. economy has entered a new era. This "new economy" is generally characterized as having technological innovations that have raised productivity and, accordingly, removed pricing power from the world's producers on a more lasting basis. Although the 2001 recession quelled the discussion about whether the United States, and perhaps even the world, had entered a period characterized by sustained high levels of economic growth, researchers continue to investigate the effects of technological change on the economy. This volume examines the underpinnings of the new economy - technology and its effects on macroeconomic growth and the labor market. Technology, Growth, and the Labor Market brings together research by economists from academia and the Federal Reserve System. The first section of the volume includes discussions by monetary policymakers with firsthand experience in determining how technology affects productivity, inequality, and macroeconomic growth. Papers in the second section discuss the sources of the surge in labor productivity growth during the latter half of the 1990s and present forecasts of labor productivity growth rates during the next few years. In the third section, the papers focus on the role of technological advances in changes in earnings inequality in the labor market. The authors examine whether inequality should be viewed as a causal result of skill-biased technological change or whether there is a missing link - or perhaps no link - between changes in technology and changes in wage inequality. The final section explores the relationships between computer investment, worker skills, human resource practices, and productivity at the industry and firm levels.

Author: Charles R. Hulten
Publisher: University of Chicago Press
ISBN: 0226360644
Category : Medical
Languages : en
Pages : 648

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Book Description
The productivity slowdown of the 1970s and 1980s and the resumption of productivity growth in the 1990s have provoked controversy among policymakers and researchers. Economists have been forced to reexamine fundamental questions of measurement technique. Some researchers argue that econometric approaches to productivity measurement usefully address shortcomings of the dominant index number techniques while others maintain that current productivity statistics underreport damage to the environment. In this book, the contributors propose innovative approaches to these issues. The result is a state-of-the-art exposition of contemporary productivity analysis. Charles R. Hulten is professor of economics at the University of Maryland. He has been a senior research associate at the Urban Institute and is chair of the Conference on Research in Income and Wealth of the National Bureau of Economic Research. Michael Harper is chief of the Division of Productivity Research at the Bureau of Labor Statistics. Edwin R. Dean, formerly associate commissioner for Productivity and Technology at the Bureau of Labor Statistics, is adjunct professor of economics at The George Washington University.

Author: Sandra Ospina
Publisher: International Monetary Fund
ISBN: 1451982119
Category : Business & Economics
Languages : en
Pages : 36

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Book Description
This paper presents empirical evidence on the impact of competition on firm productivity. Using firm-level observations from the World Bank Enterprise Survey database, we find a positive and robust causal relationship between our proxies for competition and our measures of productivity. We also find that countries that implemented product-market reforms had a more pronounced increase in competition, and correspondingly, in productivity: the contribution to productivity growth due to competition spurred by product-market reforms is around 12-15 percent.