The recent fall of labor's share of GDP in numerous countries is well-documented, but its causes are poorly understood. We sketch a “superstar firm” model where industries are increasingly ...characterized by “winner take most” competition, leading a small number of highly profitable (and low labor share) firms to command growing market share. Building on Autor et al. (2017), we evaluate and confirm two core claims of the superstar firm hypothesis: the concentration of sales among firms within industries has risen across much of the private sector; and industries with larger increases in concentration exhibit a larger decline in labor's share.
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BFBNIB, CEKLJ, INZLJ, IZUM, KILJ, NMLJ, NUK, ODKLJ, PILJ, PNG, SAZU, UL, UM, UPUK, ZRSKP
Consumers increasingly expect brands to "pick a side" on divisive sociopolitical issues, but managers are reluctant to risk alienating customers who oppose their position. Moreover, research on ...identity-based consumption and negativity bias suggests that corporate political advocacy (CPA) is more likely to repel existing customers who oppose the CPA than to attract new customers who support it, implying that the net effect will be negative even if consumers overall are evenly divided in their support/opposition. In this research, the authors posit that despite this negativity bias in individual-level choice, the net effect of CPA at the market level is determined by a sorting process that benefits small-share brands and hurts large-share brands. This is because having few customers to lose and many to gain can offset the risk of the negativity bias in consumers' identity-driven responses to CPA, potentially leading to a net influx of customers for small-share brands. Five experiments provide support for this theorizing and identify authenticity as a necessary condition for small share brands to benefit.
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IZUM, KILJ, NUK, OILJ, PILJ, SAZU, UKNU, UL, UM, UPUK
This paper empirically examines how capital affects a bank’s performance (survival and market share) and how this effect varies across banking crises, market crises, and normal times that occurred in ...the US over the past quarter century. We have two main results. First, capital helps small banks to increase their probability of survival and market share at all times (during banking crises, market crises, and normal times). Second, capital enhances the performance of medium and large banks primarily during banking crises. Additional tests explore channels through which capital generates these effects. Numerous robustness checks and additional tests are performed.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK
Background: Hyper-palatable foods (HPF) are highly prevalent in the US food system and may strongly influence population-level obesity rates. The purpose of the study was to examine the degree to ...which US food companies have HPF in their food product portfolios, and the degree to which companies create HPF targeting children. Methods: The study used data from the US Department of Agriculture, the 2018 Branded Foods Database, which contains >200,000 branded foods sold by US food companies. A standardized definition of HPF that specifies quantitative combinations of nutrients (fat and sodium; fat and sugar; carbohydrates and sodium) was used to identify HPF using the online data visualization software, SuAVE. Results: Across 19,270 total food companies, companies with the largest market shares of HPF were superstores (e.g., Wal-Mart Stores, Inc), grocery stores (Meijer, Inc), and breakfast-focused companies (e.g., General Mills, Inc). Within company product portfolios, the percentage of HPF sold per company varied substantially (Median = 28.1%; IQR = 22.4%). Among companies with at least moderately sized product portfolios (>100 items), 16 companies (6.2%; 16/260) had product lines comprised primarily of HPF products (>80%). Companies with the highest percentage (100%) of HPF in their product portfolios were specialty brands that served carbohydrate-rich foods (e.g., potato chips). Companies selling the largest percentage of HPF products targeting children were specialty cookies and bakery brands (Taste of Nature, Inc, Katy's LLC, Gourmet International Foods) and the Walgreens Pharmacy store food brand, 'Nice! Simple, Honest Delicious.' Conclusions: Major US superstore and grocery store companies have the highest market shares for selling HPF to the US public. Specialty food companies have the highest percentage of HPF in their portfolios and have the highest percentage of HPF products marketed to children.
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FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SBCE, SBMB, UL, UM, UPUK
5.
The Decline of the U.S. Labor Share ELSBY, MICHAEL W. L.; HOBIJN, BART; ŞAHİN, AYŞEGÜL
Brookings papers on economic activity,
10/2013, Volume:
2013, Issue:
2
Journal Article
Peer reviewed
Open access
Over the past quarter century, labor's share of income in the United States has trended downward, reaching its lowest level in the postwar period after the Great Recession. A detailed examination of ...the magnitude, determinants, and implications of this decline delivers five conclusions. First, about a third of the decline in the published labor share appears to be an artifact of statistical procedures used to impute the labor income of the self-employed that underlies the headline measure. Second, movements in labor's share are not solely a feature of recent U.S. history: The relative stability of the aggregate labor share prior to the 1980s in fact veiled substantial, though offsetting, movements in labor shares within industries. By contrast, the recent decline has been dominated by the trade and manufacturing sectors. Third, U.S. data provide limited support for neoclassical explanations based on the substitution of capital for (unskilled) labor to exploit technical change embodied in new capital goods. Fourth, prima facie evidence for institutional explanations based on the decline in unionization is inconclusive. Finally, our analysis identifies offshoring of the labor-intensive component of the U.S. supply chain as a leading potential explanation of the decline in the U.S. labor share over the past 25 years.
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BFBNIB, CEKLJ, INZLJ, IZUM, KILJ, NMLJ, NUK, ODKLJ, PILJ, PNG, SAZU, UL, UM, UPUK, ZRSKP
We present a model of nonbalanced growth based on differences in factor proportions and capital deepening. Capital deepening increases the relative output of the more capital‐intensive sector but ...simultaneously induces a reallocation of capital and labor away from that sector. Using a two‐sector general equilibrium model, we show that nonbalanced growth is consistent with an asymptotic equilibrium with a constant interest rate and capital share in national income. For plausible parameter values, the model generates dynamics consistent with U.S. data, in particular, faster growth of employment and slower growth of output in less capital‐intensive sectors, and aggregate behavior consistent with the Kaldor facts.
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BFBNIB, CEKLJ, INZLJ, IZUM, KILJ, NMLJ, NUK, PILJ, PNG, SAZU, UL, UM, UPUK, ZRSKP
In the postwar era, developed economies have experienced two substantial trends in the net capital share of aggregate income: a rise during the last several decades, which is well known, and a fall ...of comparable magnitude that continued until the 1970s, which is less well known. Overall, the net capital share has increased since 1948, but once disaggregated this increase turns out to come entirely from the housing sector: the contribution to net capital income from all other sectors has been zero or slightly negative, as the fall and rise have offset each other. Several influential accounts of the recent rise emphasize the role of increased capital accumulation, but this view is at odds with theory and evidence: it requires empirically improbable elasticities of substitution, and it presumes a correlation between the capital-income ratio and capital share that is not visible in the data. A more limited narrative that stresses scarcity and the increased cost of housing better fits the data.These results are clarified using a new, multisector model of factor shares.
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BFBNIB, CEKLJ, INZLJ, IZUM, KILJ, NMLJ, NUK, ODKLJ, PILJ, PNG, SAZU, UL, UM, UPUK, ZRSKP
•Mexicós labor share fell from 1990 to 2015 because of reductions in formal sectors.•Stagnant productivity in the self-employment sectors held real formal wages back.•With formal wages anchored, ...formal productivity gains accrued to profits.•Slow economic growth had a crucial role in the decline of the labor share.•A remaining puzzle is why a rising profit share failed to stimulate growth.
The paper studies the decline of the labor income share (LIS) in Mexico during the period 1990–2015. The decline is mostly explained by reductions within the economy’s major sectors (including manufacturing, tradables, and non-tradables) rather than by a recomposition of value added towards sectors with low labor shares. In contrast to agriculture—where LIS fell due to a shift of labor force from self-employment to wage-employment—in other major areas of the economy the fall in LIS is explained by reductions within the wage-employment sector. Econometric estimations indicate that parallel declines in the wage share and relative productivity of non-tradables and in the US manufacturing labor share all played a large role in the reduction of the manufacturing wage share in Mexico. More generally, the analysis suggests that the lagging productivity of the economy’s informal non-tradable sector—itself a reflection of the country’s low aggregate rate of economic growth—is a crucial factor in the fall of LIS in the formal sectors. The paper concludes by discussing possible explanations for the paradox of the slow rate of economic growth in Mexico despite the rise in the profit share.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
This paper shows that large cash reserves lead to systematic future market share gains at the expense of industry rivals. Using shifts in import tariffs to identify exogenous intensification of ...competition, difference-in-difference estimations support the causal impact of cash on product market performance. Moreover, the analysis reveals that the "competitive" effect of cash is markedly distinct from the strategic effect of debt on product market outcomes. This effect is stronger when rivals face tighter financing constraints and when the number of interactions between competitors is large. Overall, the results suggest that cash policy encompasses a substantial strategic dimension.
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BFBNIB, FZAB, GIS, IJS, INZLJ, KILJ, NLZOH, NMLJ, NUK, OILJ, PNG, SAZU, SBCE, SBMB, UL, UM, UPUK, ZRSKP
Manuscript Type
Empirical
Research Question/Issue
On April 2005, the China Securities Regulatory Commission (CSRC) launched the split‐share structure reform to mitigate principal–principal agency ...problems. Using the reform as an exogenous shock, we examine the impact of principal–principal agency problems on stock price crash risk. Specifically, this study attempts to answer two questions: (1) Does the split‐share structure reform in China decrease stock price crash risk? (2) Is the above effect induced by the mitigation of principal–principal agency problems?
Research Findings/Insights
We find that the reform induces a significant decrease in crash risk after controlling for other predictors of crash risk, and this effect is more pronounced in firms with a higher proportion of shares held by controlling shareholders. Moreover, we find that the negative impact of the reform on stock price crash risk is more pronounced in firms with a high level of tunneling prior to the reform, which indicates that reform induces less tunneling, and adversely affects crash risk.
Theoretical/Academic Implications
This study contributes to the literature in two ways. First, this study constitutes the first effort to explore the determinants of stock price crash risk from the perspective of principal–principal agency problems. Second, this study enriches the growing literature on the economic consequences of the split‐share structure reform in China.
Practitioner/Policy Implications
We draw two important implications from our results. First, our findings highlight that regulatory intervention is an important way to enhance corporate governance. This is particularly beneficial in China, a transitional economy which may lag in terms of general protection of investors and information disclosure. Second, this study also confirms that minority shareholders and listed firms benefit from the reform. Both are crucial to the healthy development of the capital market in China.
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BFBNIB, FZAB, GIS, IJS, IZUM, KILJ, NLZOH, NUK, OILJ, PILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
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