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Technical Change and Superstar Effects: Evidence from the Rollout of Television

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  • Felix Koenig

Abstract

Technical change that extends market scale can generate winner-take-all dynamics, with large income growth among top earners. I test this "superstar model" in the entertainer labor market, where the historic rollout of television creates a natural experiment in scale-related technological change. The resulting inequality changes are consistent with superstar theory: the launch of a local TV station skews the entertainer wage distribution sharply to the right, with the biggest impact at the very top of the distribution, while negatively impacting workers below the star level. The findings provide evidence of superstar effects and distinguish such effects from popular alternative models.

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  • Felix Koenig, 2023. "Technical Change and Superstar Effects: Evidence from the Rollout of Television," American Economic Review: Insights, American Economic Association, vol. 5(2), pages 207-223, June.
    • Handle: RePEc:aea:aerins:v:5:y:2023:i:2:p:207-23
    DOI: 10.1257/aeri.20210539
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    Cited by:

    1. Boken, Johannes & Draca. Mirko & Mastrorocco, Nicola & Ornaghi, Arianna, 2023. "The Returns to Viral Media : The Case of US Campaign Contributions," The Warwick Economics Research Paper Series (TWERPS) 1472, University of Warwick, Department of Economics.
    2. Morten Olsen & Joshua Gottlieb & David Hemous & Jeffrey Clemens, 2017. "The Spill-over Effects of Top Income Inequality," 2017 Meeting Papers 332, Society for Economic Dynamics.
    3. Rachel Scarfe & Carl Singleton & Paul Telemo, 2021. "Extreme Wages, Performance, and Superstars in a Market for Footballers," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(1), pages 84-118, January.
    4. Biermann, Marcus, 2021. "Remote talks: changes to economics seminars during Covid-19," LSE Research Online Documents on Economics 114429, London School of Economics and Political Science, LSE Library.
    5. Kim, Woojin, 2022. "Television and American consumerism," Journal of Public Economics, Elsevier, vol. 208(C).
    6. Marcus Biermann, 2021. "Remote talks: changes to economics seminars during Covid-19," CEP Discussion Papers dp1759, Centre for Economic Performance, LSE.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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