Firm Ex-ante Heterogeneity, Entry, and the Labour Share

Grazzini, Jakob and Rossi, Lorenza (2022) Firm Ex-ante Heterogeneity, Entry, and the Labour Share. Economic Journal. ISSN 0013-0133

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Abstract

This paper considers a two-sector RBC model augmented with firm heterogeneity and firm dynamics and studies the steady state and dynamic properties of the model in response to a decline in the relative price of investment. It shows that both firm heterogeneity and entry play a crucial role in the decline in the labour share and the increase in capital intensity observed in the US economy. Using ORBIS firm-level data of the US economy, the paper finds robust evidence consistent with the mechanisms described in the model.

Item Type:
Journal Article
Journal or Publication Title:
Economic Journal
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
176099
Deposited By:
Deposited On:
16 Sep 2022 12:25
Refereed?:
Yes
Published?:
Published
Last Modified:
16 Sep 2022 12:35