1. Something for Nothing? How Growing Rent-seeking is at the Heart of America’s Economic Troubles
- Author:
- Lachlan Carey and Amn Nasir
- Publication Date:
- 05-2019
- Content Type:
- Journal Article
- Journal:
- Woodrow Wilson School Journal of Public and International Affairs
- Institution:
- Woodrow Wilson School of Public and International Affairs, Princeton University
- Abstract:
- The following paper studies three main questions: First, What is the association between increasing concentration and labor and profit shares? Second, is this effect different across sectors? Third, is this effect uniform across advanced economies? The paper finds that while there is a negative relationship between concentration and labor share and a positive relationship between concentration and profit share, the result is more pronounced in the United States than in similar advanced European economies. Moreover, the results are stronger for the manufacturing sector than for the services sector. The paper concludes that this evidence suggests that deviations from perfect competition are likely explained by declining competition in the U.S., whereas these secular trends, such as heterogeneous technology adoption and the declining price of capital, are more likely at play in Europe. Consequently, the paper prioritizes pre-distribution over redistribution.
- Topic:
- Labor Issues, Economy, Business, and Capital Flows
- Political Geography:
- United States of America and North America