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Technical change and superstar effects: evidence from the roll-out of television

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  • Felix Koenig

Abstract

Technical change that improves economies of scale can generate fast income growth among top earners at the expense of everyone else. I test this classic "superstar model" in the labor market for entertainers where the historic roll-out of television led to a natural experiment in scale-related technological change. The launch of a local TV station multiplied audiences of top entertainers nearly fourfold and resulted in a 50% increase of the top percentile's income share, a more right-skewed income distribution, and significant income losses for lower ranked entertainers. The results confirm the predictions of the "superstar model" and are at odds with canonical models of skill-biased technological change.

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  • Felix Koenig, 2019. "Technical change and superstar effects: evidence from the roll-out of television," CEP Discussion Papers dp1663, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1663
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    Cited by:

    1. 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.
    2. Kim, Woojin, 2022. "Television and American consumerism," Journal of Public Economics, Elsevier, vol. 208(C).
    3. 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.
    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. Marcus Biermann, 2021. "Remote talks: changes to economics seminars during Covid-19," CEP Discussion Papers dp1759, Centre for Economic Performance, LSE.
    6. 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.

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    More about this item

    Keywords

    Superstar Effect; inequality; top incomes; technical change;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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