Final published version, 562 KB, PDF document
Research output: Working paper
Research output: Working paper
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TY - UNPB
T1 - Labor Share Decline and Productivity Slowdown: A Micro-Macro Analysis
AU - Crucitti, Francesca
AU - Rossi, Lorenza
PY - 2022/2/28
Y1 - 2022/2/28
N2 - This paper uses firm-level data to empirically investigate the relative contribution of the declining relative price of investments, the increasing automation, and the rising price markups on the labor share decline and productivity slowdown witnessed in the last 20 years in the Spain manufacturing sector. The results point to automation and markups as important drivers of both phenomena, while the relative price of investments has the opposite sign, coherent with the evidence of capital-labor complementarity. A theoretical model characterized by rm heterogeneity, endogenous markups distribution, and financial market frictions, parsimoniously accounts for the empirical findings, and it is used to draw aggregate implications. Last, the modelaccounts for the observed changes in the distribution of rm markup and size and for the decline in business dynamism that occurred in the last decades.
AB - This paper uses firm-level data to empirically investigate the relative contribution of the declining relative price of investments, the increasing automation, and the rising price markups on the labor share decline and productivity slowdown witnessed in the last 20 years in the Spain manufacturing sector. The results point to automation and markups as important drivers of both phenomena, while the relative price of investments has the opposite sign, coherent with the evidence of capital-labor complementarity. A theoretical model characterized by rm heterogeneity, endogenous markups distribution, and financial market frictions, parsimoniously accounts for the empirical findings, and it is used to draw aggregate implications. Last, the modelaccounts for the observed changes in the distribution of rm markup and size and for the decline in business dynamism that occurred in the last decades.
KW - Labor share
KW - TFP Losses
KW - Firm dynamics
KW - Capital Misallocation
M3 - Working paper
T3 - Economics Working Papers Series
BT - Labor Share Decline and Productivity Slowdown: A Micro-Macro Analysis
PB - The Department of Economics
CY - Lancaster
ER -