Comment

Abstract

Aside from giving us a terrific title, Eisfeldt, Falato, and Xiaolan have written an important andprovocative paper. Theydemonstrate amastery of accounting intricacies and deftly deploy this knowledge to motivate compelling reduced-form empirical analysis and transparent structural estimation. The basic premise of the paper is straightforward: stock-based compensation has increased in importance over time, and its measurement in the national accounts has not kept up. Accordingly, we are missing a large and increasing share of labor income in the national accounts. Thismissing labor income implicates a panoply of central questions in contemporary economics. Among the key results, correcting for thismischaracterized income accounts for one-third of the labor share decline in manufacturing and all of the decline for nonproduction workers. In the structural estimation, this correction recovers the complementarity of skill and capital, explored in Krusell et al. (2000) and a rich subsequent literature. In addition, themodel-implied estimates point toward substitution between wages and stock-based compensation; in other words, this compensation is better thought of as a component of the marginal product of labor rather than bargaining rents. These are important and fascinating results. I see the paper as a major contribution with ample room for follow-on work. My comments will focus on (i) drawing some connections between these findings and other patterns in the data, (ii) providing additional data and calculations to support the basic premise of the paper, and (iii) using the paper’s results to reinterpret other puzzles. In short, I see the paper as being even better than the authors do and congratulate them on this contribution.