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The Decline in Rent Sharing

Author

Listed:
  • Brian Bell
  • Paweł Bukowski
  • Stephen Machin

Abstract

The evolution of rent sharing is studied. Based on a panel of the top 300 publicly quoted British companies over 35 years and using excess stock market returns to patenting activity as an instrument for economic rents, the paper reports evidence of a significant fall over time in the pass-through from rents to wages. It confirms that wages do respond to firm-level shocks to economic rents, but by significantly less after 2000 than during the 1980s and 1990s. The evidence of decline is robust, corroborated with alternative instruments and industry-level analysis for the United States and the European Union.

Suggested Citation

  • Brian Bell & Paweł Bukowski & Stephen Machin, 2024. "The Decline in Rent Sharing," Journal of Labor Economics, University of Chicago Press, vol. 42(3), pages 683-716.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/724570
    DOI: 10.1086/724570
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    Cited by:

    1. Mertens, Matthias, 2023. "Labor Market Power and Between-Firm Wage (In)Equality," International Journal of Industrial Organization, Elsevier, vol. 91(C).
    2. Munch, Jakob R. & Olney, William W., 2024. "Offshoring and the Decline of Unions," IZA Discussion Papers 17116, Institute of Labor Economics (IZA).
    3. Stephen Machin, 2024. "Real wages, inequality and living standards," CEP Election Analysis Papers 066, Centre for Economic Performance, LSE.

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    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General

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