Revisiting Capital-Skill Complementarity, Inequality, and Labor Share

2021 ◽  
Vol 2021 (1319) ◽  
pp. 1-43
Author(s):  
Lee Ohanian ◽  
◽  
Musa Orak ◽  
Shihan Shen ◽  
◽  
...  
Keyword(s):  
Strong Evidence ◽  
Skill Premium ◽  
Average Level ◽  
Alternative Measure ◽  
Business Sector ◽  
Labor Share ◽  
Real Gdp ◽  
Percentage Points ◽  
Gross Income ◽  
Labor's Share

This paper revisits capital-skill complementarity and inequality, as in Krusell, Ohanian, Rios-Rull and Violante (KORV, 2000). Using their methodology, we study how well the KORV model accounts for more recent data, including the large changes in the labor's share of income that were not present in KORV. We study both labor share of gross income (as in KORV), and income net of depreciation. We also use nonfarm business sector output as an alternative measure of production to real GDP. We find strong evidence for continued capital-skill complementarity in the most recent data, and we also find that the model continues to closely account for the skill premium. The model captures the average level of labor share, though it overpredicts its level by 2-4 percentage points at the end of the period.

scholarly journals The Fall of the Labor Share and the Rise of Superstar Firms*

2020 ◽  
Vol 135 (2) ◽  
pp. 645-709 ◽  
Author(s):  
David Autor ◽  
David Dorn ◽  
Lawrence F Katz ◽  
Christina Patterson ◽  
John Van Reenen
Keyword(s):  
Value Added ◽  
The United States ◽  
Market Concentration ◽  
Technological Changes ◽  
Labor Share ◽  
Economic Census ◽  
New Interpretation ◽  
Labor's Share ◽  
The U.S ◽  
Number Of Firms

Abstract The fall of labor’s share of GDP in the United States and many other countries in recent decades is well documented but its causes remain uncertain. Existing empirical assessments typically rely on industry or macro data, obscuring heterogeneity among firms. In this article, we analyze micro panel data from the U.S. Economic Census since 1982 and document empirical patterns to assess a new interpretation of the fall in the labor share based on the rise of “superstar firms.” If globalization or technological changes push sales toward the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms, which have high markups and a low labor share of value added. We empirically assess seven predictions of this hypothesis: (i) industry sales will increasingly concentrate in a small number of firms; (ii) industries where concentration rises most will have the largest declines in the labor share; (iii) the fall in the labor share will be driven largely by reallocation rather than a fall in the unweighted mean labor share across all firms; (iv) the between-firm reallocation component of the fall in the labor share will be greatest in the sectors with the largest increases in market concentration; (v) the industries that are becoming more concentrated will exhibit faster growth of productivity; (vi) the aggregate markup will rise more than the typical firm’s markup; and (vii) these patterns should be observed not only in U.S. firms but also internationally. We find support for all of these predictions.

scholarly journals Bankruptcy Prediction And Its Effect On Stock Prices As Impact Of The COVID-19 Pandemic

2021 ◽  
Vol 25 ◽  
pp. 567-582
Author(s):  
Muhammad Ramadhani Kesuma ◽  
Felisitas Defung ◽  
Anisa Kusumawardani
Keyword(s):  
Prediction Model ◽  
Strong Evidence ◽  
Stock Prices ◽  
Stock Price ◽  
Prediction Models ◽  
Bankruptcy Prediction ◽  
Business Sector ◽  
The World ◽  
Hotel Sector

As COVID-19 pandemic hit the world since early 2020, one business sector in many countries that struggling to survive is tourism and its derivatives, such as restaurants and hotels.  This study aims to examine the accuracy of the Springate and Grover models in predicting bankruptcy, as well as the effect on stock prices of tourism, restaurant, and hotel sector in Indonesia. The results show that all sample tourism, restaurant, and hotel companies are bankrupt under the Springate model, whilst according to Grover's model the findings are varied during the study period. Furthermore, the Grover model is implied to be more accurate than the Springate model. The effect of both prediction models on stock price appears dissimilar. Springate's prediction model suggests a positive and significant effect on stock prices, whereas there is no strong evidence about the effect of Grover’s prediction model.

Do Trade Agreements Contribute to the Decline in Labor Share? Evidence from Latin American Countries

2021 ◽  
Author(s):  
Martín González Rozada ◽  
Hernán Ruffo
Keyword(s):  
Case Studies ◽  
Latin American ◽  
Negative Impact ◽  
Trade Agreements ◽  
The United States ◽  
The European Union ◽  
Donor Pool ◽  
Labor Share ◽  
Percentage Points ◽  
Latin American Countries

In this paper, we explore the role of trade in the evolution of labor share in Latin American countries. We use trade agreements with large economies (the United States, the European Union, and China) to capture the effect of sharp changes in trade. In the last two decades, labor share has displayed a negative trend among those countries that signed trade agreements, while in other countries labor share increased, widening the gap by 7 percentage points. We apply synthetic control methods to estimate the average causal impact of trade agreements on labor share. While effects are heterogeneous in our eight case studies, the average impact is negative between 2 to 4 percentage points of GDP four years after the entry into force of the trade agreements. This result is robust to the specification used and to the set of countries in the donor pool. We also find that, after trade agreements, exports of manufactured goods and the share of industry in GDP increase on average, most notably in the case studies where negative effects on labor share are significant. A decomposition shows that all the reduction in labor share is explained by a negative impact on real wages.

TIME-FOR-CHANGE MODEL AGAIN RIGHT ON THE MONEY IN 2008

2009 ◽  
Vol 42 (01) ◽  
pp. 22 ◽  
Author(s):  
Alan I. Abramowitz
Keyword(s):  
Presidential Election ◽  
Presidential Elections ◽  
Change Model ◽  
Major Party ◽  
Dummy Variable ◽  
Real Gdp ◽  
Percentage Points ◽  
Approval Rating ◽  
Current Error ◽  
Made In

The October 2008 issue ofPSpublished a symposium of presidential and congressional forecasts made in the summer leading up to the election. This article is an assessment of the accuracy of their models.The Time-for-Change Model proved one of the most accurate of the 2008 presidential election forecasts run in the OctoberPSsymposium. Using three predictors—the president's approval rating at mid-year, the growth rate of real GDP during the second quarter, and the time-for-change dummy variable—the model predicted that Barack Obama would win the presidential election with 54.3% of the major-party vote. According to nearly final tabulations compiled by uselections.org, as of December 8, Obama has received just over 53.6% of the major-party vote. However, it is likely that Obama's final total will reach 53.7% of the major-party vote. Therefore, the model's current error of 0.9 percentage points is likely to decrease further. The model has now correctly predicted the winner of the popular vote in all six presidential elections since its creation in 1988.

scholarly journals TAX AUDIT AND COMPLIANCE OF INDONESIAN INDIVIDUAL TAXPAYERS

INFO ARTHA ◽  
2020 ◽  
Vol 4 (2) ◽  
pp. 49
Author(s):  
Arif Nugrahanto
Keyword(s):  
Tax Compliance ◽  
Interaction Coefficient ◽  
Difference In Difference ◽  
Percentage Points ◽  
Tax Audit ◽  
Income Reporting ◽  
Gross Income

This research is conducted to answer the question whether the audit increases the tax compliance or not. The results shows that there is an increase in the amount of gross income reported by the taxpayer after audit although the result is weak.This study adopt the research of Norman Gemmell and Marissa Ratto (2012) by using difference-in-difference to determine the effect of changes in taxpayer compliance after audit. The population of the research is individual taxpayers who are registered at the high-wealth individual tax office in Indonesia who submit their tax return in the period 2008 to. 2012.From the regression results, I obtain an interaction coefficient of 0.035 although only significance at α = 0.15. It shows that there is a difference in the growth of gross income reporting from taxpayers who are audited after compared to the growth in gross income reporting from taxpayers who do not undergo audit. With a coefficient of 0.035 it can be interpreted that the gross income reporting of the audited Taxpayer is 3.56 percentage points higher than those who has not been audited.

Housing market downturns and Euro Area growth

2008 ◽  
Vol 205 ◽  
pp. 21-33
Author(s):  
Ray Barrell ◽  
Tatiana Fic ◽  
Sylvia Gottschalk ◽  
Iana Liadze
Keyword(s):  
Euro Area ◽  
Domestic Demand ◽  
Income Growth ◽  
Housing Wealth ◽  
Short Term ◽  
Forecast Period ◽  
Consumption Growth ◽  
Real Gdp ◽  
Percentage Points ◽  
Area Growth

The Euro Area economy grew by 0.8 per cent in the first quarter of this year, and is proving more resilient than anticipated in our April forecast. We were then expecting a markedly less robust outturn of an increase of 0.4 per cent. However, despite this positive start, we still anticipate a downturn in the Euro Area's year-on-year economic growth. After peaking at 2.9 per cent in 2006, real GDP growth is projected to slow down to around 2 per cent over the forecast period. Sluggish domestic demand and diminishing contributions from net trade both contribute to this downturn. Household consumption is forecast to expand by 1 per cent in the short term, down from 1.6 per cent in 2007. Consumption growth is expected to be considerably weaker than in 2007 due to accelerating inflation and the slowdown in the growth of housing wealth, particularly in France, Ireland and Spain as well as elsewhere. Moreover, real disposable income growth is expected to slow down from 2 per cent in 2007 to about 1¼ per cent this year. Nominal wages are expected to rise by 3½ per cent on average this year, and HCP inflation is likely to pick up strongly to slightly more than 3¾ per cent per annum, 1½ percentage points above the level of last year.

Electricity consumption and GDP nexus in Bangladesh: a time series investigation

2019 ◽  
Vol 27 (1) ◽  
pp. 35-48 ◽  
Author(s):  
Sima Rani Dey ◽  
Mohammed Tareque
Keyword(s):  
Causal Relationship ◽  
Strong Evidence ◽  
Electricity Consumption ◽  
Omitted Variables ◽  
Content Type ◽  
Real Gdp ◽  
Long Run ◽  
Short Run ◽  
Per Capita ◽  
Bound Test

Purpose The purpose of this paper is to assess the empirical cointegration, long-run and short-run dynamics as well as causal relationship between electricity consumption and real GDP in Bangladesh for the period of 1971‒2014. Design/methodology/approach Autoregressive Distributed lag (ARDL) “Bound Test” approach is employed for the investigation in this study. Findings Both short-run and long-run coefficients are providing strong evidence of having positive significant association between electricity consumption and GDP. Our long-run results remain robust to different measurements and estimators as well. The study reveals the unidirectional causal flow running from per capita electricity consumption to per capita real GDP in the short run. The study result also yields strong evidence of bidirectional causal relationship between per capita electricity consumption and per capita real GDP in the long run with feedback. It is suggested that both electricity generation and conservation policy will be effective for Bangladesh economy. Originality/value In prior studies, lack of causality between electricity consumption and GDP is due to the omitted variables. Combined effects of public spending and trade openness on GDP and electricity consumption are also considerable.

scholarly journals The Micro-Level Anatomy of the Labor Share Decline*

2021 ◽  
Vol 136 (2) ◽  
pp. 1031-1087 ◽  
Author(s):  
Matthias Kehrig ◽  
Nicolas Vincent
Keyword(s):  
Significant Role ◽  
Value Added ◽  
Price Premium ◽  
Demand Side ◽  
Product Price ◽  
Labor Share ◽  
Percentage Points ◽  
Level Data ◽  
Micro Level ◽  
Over Time

Abstract The labor share in U.S. manufacturing declined from 61% in 1967 to 41% in 2012. The labor share of the typical U.S. manufacturing establishment, in contrast, rose by over 3 percentage points during the same period. Using micro-level data, we document five salient facts: (i) since the 1980s, there has been a dramatic reallocation of value added toward the lower end of the labor share distribution; (ii) this aggregate reallocation is not due to entry/exit, to “superstars” growing faster, or to large establishments lowering their labor shares, but is instead due to units whose labor share fell as they grew in size; (iii) low labor share (LL) establishments benefit from high revenue labor productivity, not low wages; (iv) they also enjoy a product price premium relative to their peers; and (v) they have only temporarily lower labor shares that rebound after five to eight years. This transient pattern has become more pronounced over time, and the dynamics of value added and employment are increasingly disconnected. Taken together, we interpret these facts as pointing to a significant role for demand-side forces.

scholarly journals Fiscal Policy and the Great Recession in the Euro Area

2012 ◽  
Vol 102 (3) ◽  
pp. 71-76 ◽  
Author(s):  
Günter Coenen ◽  
Roland Straub ◽  
Mathias Trabandt
Keyword(s):  
Time Series ◽  
Fiscal Policy ◽  
Euro Area ◽  
Great Recession ◽  
Gdp Growth ◽  
Extended Version ◽  
The Great Recession ◽  
European Central ◽  
Real Gdp ◽  
Percentage Points

How much did fiscal policy contribute to euro area real GDP growth during the Great Recession? We estimate that discretionary fiscal measures have increased annualized quarterly real GDP growth during the crisis by up to 1.6 percentage points. We obtain our result by using an extended version of the European Central Bank's New Area-Wide Model with a rich specification of the fiscal sector. A detailed modeling of the fiscal sector and the incorporation of as many as eight fiscal time series appear pivotal for our result.

Benefits of Syllabic Input Compression for Users of Cochlear Implants

2002 ◽  
Vol 13 (01) ◽  
pp. 014-024 ◽  
Author(s):  
Hugh J. McDermott ◽  
Katherine R. Henshall ◽  
Colette M. McKay
Keyword(s):  
Cochlear Implants ◽  
Input Signal ◽  
Speech Intelligibility ◽  
Average Level ◽  
Signal Compression ◽  
Low Level ◽  
Sentence Recognition ◽  
Percentage Points ◽  
Low Levels

Ten users of multielectrode cochlear implants participated in an evaluation of the perceptual effects of input-signal compression. A syllabic compressor was introduced into the microphone circuit of Spectra-22 or SPrint sound processors. The post-compression gain was adjusted to provide similar loudness for speech at an average level of 65 dBA with compression either enabled or disabled. Sentence recognition was measured at three levels. Averaged across all listeners, statistically significant score increases were obtained at each level with compression enabled (45 dBA: 19.6 percentage points, p < .0001; 55 dBA: 16.6 percentage points, p < .0001; 70 dBA: 3.1 percentage points, p = .031). A test of speech intelligibility in noise showed no significant effect of compression. Generally, participants in the trial reported improved perception of low-level sounds with compression, although a few disliked the increased loudness of some background noises. Some participants suggested that the ability to enable or disable compression with a manual switch would be helpful. Overall, the results show that input compression can improve the performance of these sound processors for users of cochlear implants, especially when listening to speech at low levels.

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