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Rent Creation and Rent Sharing: New Measures and Impacts on Total Factor Productivity

Author

Listed:
  • Gilbert Cette

    (Centre de recherche de la Banque de France - Banque de France, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Jimmy Lopez

    (DGEI-DEMS - Banque de France - Direction Générale des Etudes et des relations Internationales, Direction des Etudes Microéconomique et Structurelles)

  • Jacques Mairesse

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

This analysis proposes new measures of rent creation and rent sharing and assesses their impact on productivity on cross-country-industry panel data. We find first that: (1) anticompetitive product market regulations positively affect rent creation and (2) employment protection legislation boosts hourly wages, particularly for low-skill workers. However, we find no significant impact of this employment legislation on rent sharing, as the hourly wage increases are offset by a negative impact on hours worked. Second, using regulation indicators as instruments, we find that rent creation and rent sharing both have a substantial negative impact on total factor productivity. (JEL E22, E24, O30, L50, O43, O47, C23)

Suggested Citation

  • Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2019. "Rent Creation and Rent Sharing: New Measures and Impacts on Total Factor Productivity," Post-Print hal-02279411, HAL.
    • Handle: RePEc:hal:journl:hal-02279411
    DOI: 10.1111/ecin.12809
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-02279411
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    References listed on IDEAS

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    1. Andrea Bassanini & Luca Nunziata & Danielle Venn, 2009. "Job protection legislation and productivity growth in OECD countries [Appropriate growth policy: a unifying framework]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 24(58), pages 349-402.
    2. Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, January.
    3. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Labour Market Regulations and Capital Intensity," NBER Working Papers 22603, National Bureau of Economic Research, Inc.
    4. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 879-907.
    5. Sabien Dobbelaere & Jacques Mairesse, 2010. "Comparing Micro-evidence on Rent Sharing from Three Different Approaches," NBER Working Papers 16220, National Bureau of Economic Research, Inc.
    6. Dobbelaere, Sabien & Mairesse, Jacques, 2018. "Comparing micro-evidence on rent sharing from two different econometric models," Labour Economics, Elsevier, vol. 52(C), pages 18-26.
    7. Rachel Griffith & Rupert Harrison & Helen Simpson, 2010. "Product Market Reform and Innovation in the EU," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(2), pages 389-415, June.
    8. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Labour Market Regulations and Capital Intensity," NBER Working Papers 22603, National Bureau of Economic Research, Inc.
    9. Guglielmo Barone & Federico Cingano, 2011. "Service Regulation and Growth: Evidence from OECD Countries," Economic Journal, Royal Economic Society, vol. 121(555), pages 931-957, September.
    10. Nicoletti, Giuseppe & Pryor, Frederic L., 2006. "Subjective and objective measures of governmental regulations in OECD nations," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 433-449, March.
    11. Sébastien Jean & Giuseppe Nicoletti, 2015. "Product market regulation and wage premia in Europe and North America: An empirical investigation," International Economics, CEPII research center, issue 144, pages 1-28.
    12. Philippe Askenazy & Gilbert Cette & Paul Maarek, 2018. "Rent‐Sharing and Workers' Bargaining Power: An Empirical Cross‐Country/ Cross‐Industry Panel Analysis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(2), pages 563-596, April.
    13. Paul Conway & Giuseppe Nicoletti, 2007. "Product Market Regulation and Productivity Convergence: OECD Evidence and Implications for Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 15, pages 3-24, Fall.
    14. Spector, David, 2004. "Competition and the capital-labor conflict," European Economic Review, Elsevier, vol. 48(1), pages 25-38, February.
    15. Askenazy, Philippe & Cette, Gilbert & Maarek, Paul, 2012. "Rent Building, Rent Sharing: A Panel Country-Industry Empirical Analysis," IZA Discussion Papers 6443, Institute of Labor Economics (IZA).
    16. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Market Regulations, Prices, and Productivity," American Economic Review, American Economic Association, vol. 106(5), pages 104-108, May.
    17. Ghazala Azmat & Alan Manning & John Van Reenen, 2012. "Privatization and the Decline of Labour's Share: International Evidence from Network Industries," Economica, London School of Economics and Political Science, vol. 79(315), pages 470-492, July.
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    Cited by:

    1. Philippon, Thomas & Gutierrez, German, 2018. "How EU Markets Became More Competitive Than US Markets: A Study of Institutional Drift," CEPR Discussion Papers 12983, C.E.P.R. Discussion Papers.
    2. Campos, Nauro F. & Macchiarelli, Corrado, 2021. "The dynamics of core and periphery in the European monetary union: A new approach," Journal of International Money and Finance, Elsevier, vol. 112(C).
    3. Kyoji Fukao & Cristiano Perugini, 2021. "The Long‐Run Dynamics of the Labor Share in Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 445-480, June.
    4. Alestra, C. & Cette, G. & Chouard, V. & Lecat, R., 2022. "Growth impact of climate change and response policies: The advanced climate change long-term (ACCL) model1," Journal of Policy Modeling, Elsevier, vol. 44(1), pages 96-112.
    5. Claire Alestra & Gilbert Cette & Valérie Chouard & Rémy Lecat, 2020. "Long-term growth impact of climate change and policies: the Advanced Climate Change Long-term (ACCL) scenario building model," AMSE Working Papers 2007, Aix-Marseille School of Economics, France.
    6. Chantal Kegels & Dirk Verwerft, 2018. "Working Paper 09-18 - Economic impact of professional services reform in Belgium - A DSGE simulation," Working Papers 1809, Federal Planning Bureau, Belgium.
    7. Cette, Gilbert & Koehl, Lorraine & Philippon, Thomas, 2020. "Labor share," Economics Letters, Elsevier, vol. 188(C).

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    More about this item

    Keywords

    product market regulations; labor market regulations; mark-up; rent-sharing; TFP;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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