Jose Asturias, Sewon Hur, Timothy J. Kehoe, Kim J. Ruhl
Applying the Foster, Haltiwanger, and Krizan (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea. (JEL D24, E23, L13, L60, O14, O32, O47)
{"title":"Firm Entry and Exit and Aggregate Growth","authors":"Jose Asturias, Sewon Hur, Timothy J. Kehoe, Kim J. Ruhl","doi":"10.1257/mac.20200376","DOIUrl":"https://doi.org/10.1257/mac.20200376","url":null,"abstract":"Applying the Foster, Haltiwanger, and Krizan (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea. (JEL D24, E23, L13, L60, O14, O32, O47)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134955527","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper revisits the question of how allowing for imperfect substitution among workers with different skill levels affects the results of development accounting. We consider a range of models that nest the approaches in the literature and calibrate them to a common set of moments, including particularly evidence on the wage gains of migrants. We obtain two main results. First, human capital accounts for between one-half and three-fourths of cross-country income gaps. Second, human capital accounts for only modest variation in the relative productivity of skilled versus unskilled labor. (JEL E24, E25, J22, J23, J24, J31, J61)
{"title":"Skilled Labor Productivity and Cross-Country Income Differences","authors":"Lutz Hendricks, Todd Schoellman","doi":"10.1257/mac.20200256","DOIUrl":"https://doi.org/10.1257/mac.20200256","url":null,"abstract":"This paper revisits the question of how allowing for imperfect substitution among workers with different skill levels affects the results of development accounting. We consider a range of models that nest the approaches in the literature and calibrate them to a common set of moments, including particularly evidence on the wage gains of migrants. We obtain two main results. First, human capital accounts for between one-half and three-fourths of cross-country income gaps. Second, human capital accounts for only modest variation in the relative productivity of skilled versus unskilled labor. (JEL E24, E25, J22, J23, J24, J31, J61)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"38 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83795679","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the effects of aggregate government spending shocks in a production network economy where sectors differ in their price rigidity, factor intensities, use of intermediate inputs, and contribution to final demand. The model implies an aggregate value-added multiplier that is 75 percent (and $0.32) larger than that obtained in the average one-sector economy. This amplification is mainly driven by input–output linkages and—to a lesser extent—sectoral heterogeneity in price rigidity. Aggregate government spending shocks also lead to heterogeneous responses of sectoral value added, which are larger among upstream industries. We present novel empirical evidence supporting this prediction. (JEL E12, E16, E23, E43, E52, E62, H50)
{"title":"The Government Spending Multiplier in a Multisector Economy","authors":"Hafedh Bouakez, Omar Rachedi, E. Santoro","doi":"10.1257/mac.20200213","DOIUrl":"https://doi.org/10.1257/mac.20200213","url":null,"abstract":"We study the effects of aggregate government spending shocks in a production network economy where sectors differ in their price rigidity, factor intensities, use of intermediate inputs, and contribution to final demand. The model implies an aggregate value-added multiplier that is 75 percent (and $0.32) larger than that obtained in the average one-sector economy. This amplification is mainly driven by input–output linkages and—to a lesser extent—sectoral heterogeneity in price rigidity. Aggregate government spending shocks also lead to heterogeneous responses of sectoral value added, which are larger among upstream industries. We present novel empirical evidence supporting this prediction. (JEL E12, E16, E23, E43, E52, E62, H50)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"73 7 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83735705","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Business cycle recoveries have slowed in recent decades. This slowdown comes entirely from female employment, as women’s employment rates converged toward men’s during the past half-century. But does the slowdown in the growth of female employment rates translate into a slowdown for overall employment rates? We estimate the extent to which women “crowd out” men in the labor market across US states, and find that it is small. Through the lens of a general equilibrium model with home production, we show this statistic implies that 60-75 percent of the slowdown in recent business cycle recoveries can be explained by female convergence.(JEL D13, E24, E32, J16, J21)
{"title":"Women, Wealth Effects, and Slow Recoveries","authors":"Masao Fukui, Emi Nakamura, Jón Steinsson","doi":"10.1257/mac.20200312","DOIUrl":"https://doi.org/10.1257/mac.20200312","url":null,"abstract":"Business cycle recoveries have slowed in recent decades. This slowdown comes entirely from female employment, as women’s employment rates converged toward men’s during the past half-century. But does the slowdown in the growth of female employment rates translate into a slowdown for overall employment rates? We estimate the extent to which women “crowd out” men in the labor market across US states, and find that it is small. Through the lens of a general equilibrium model with home production, we show this statistic implies that 60-75 percent of the slowdown in recent business cycle recoveries can be explained by female convergence.(JEL D13, E24, E32, J16, J21)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135181169","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We employ a large panel of US income tax returns for the period 1987–2018 to extensively characterize and quantify business income risk. Our findings show business income to be much riskier than labor income. Business income is less persistent and is characterized by higher tail risk. Furthermore, when compared to labor income, heterogeneity across households is less important in explaining the cross-sectional variation in business income, and within-household income variation is more important. Our results underscore the income risks business owners face and provide stylized facts and parameter estimates useful for quantitative macroeconomic models and policy analysis. (JEL D31, G51, H24, J23, J31, K34, L26)
{"title":"A Risky Venture: Income Dynamics among Pass-Through Business Owners","authors":"Jason Debacker, Vasia Panousi, Shanthi P. Ramnath","doi":"10.1257/mac.20200134","DOIUrl":"https://doi.org/10.1257/mac.20200134","url":null,"abstract":"We employ a large panel of US income tax returns for the period 1987–2018 to extensively characterize and quantify business income risk. Our findings show business income to be much riskier than labor income. Business income is less persistent and is characterized by higher tail risk. Furthermore, when compared to labor income, heterogeneity across households is less important in explaining the cross-sectional variation in business income, and within-household income variation is more important. Our results underscore the income risks business owners face and provide stylized facts and parameter estimates useful for quantitative macroeconomic models and policy analysis. (JEL D31, G51, H24, J23, J31, K34, L26)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"90 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74812406","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We exploit cross-sectional variation in the response of US states to an identified monetary policy shock to study how the impact of monetary policy varies with the age structure of the population. We find that the economy’s response is weaker the greater the share of population under 35 years of age and stronger the greater the share between 40 and 65. We find that all age groups become more responsive to monetary policy shocks when the proportion of the middle-aged increases. We provide evidence consistent with middle-aged entrepreneurs starting and expanding businesses in response to an expansionary monetary shock. (JEL E23, E24, E32, E43, E52, J11, R23)
{"title":"Age Structure and the Impact of Monetary Policy","authors":"John Leahy, Aditi Thapar","doi":"10.1257/mac.20190337","DOIUrl":"https://doi.org/10.1257/mac.20190337","url":null,"abstract":"We exploit cross-sectional variation in the response of US states to an identified monetary policy shock to study how the impact of monetary policy varies with the age structure of the population. We find that the economy’s response is weaker the greater the share of population under 35 years of age and stronger the greater the share between 40 and 65. We find that all age groups become more responsive to monetary policy shocks when the proportion of the middle-aged increases. We provide evidence consistent with middle-aged entrepreneurs starting and expanding businesses in response to an expansionary monetary shock. (JEL E23, E24, E32, E43, E52, J11, R23)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"93 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2022-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75003786","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate the determinants of radical (“creative”) innovations that break new ground in knowledge creation. We develop a model focusing on the choice between incremental and radical innovation and on how managers of different ages and human capital are sorted across firms. Firm- and patent-level evidence reveals that firms that are more “open to disruption” are significantly more likely to engage in radical innovation and hire younger managers and inventors with a comparative advantage in radical innovation. However, once the effect of the sorting is factored in, the (causal) impact of manager age on creative innovations, though positive, is small. (JEL D22, L26, M10, M14, O31, O34)
{"title":"Radical and Incremental Innovation: The Roles of Firms, Managers, and Innovators","authors":"Daron Acemoglu, Ufuk Akcigit, M. Celik","doi":"10.1257/mac.20170410","DOIUrl":"https://doi.org/10.1257/mac.20170410","url":null,"abstract":"We investigate the determinants of radical (“creative”) innovations that break new ground in knowledge creation. We develop a model focusing on the choice between incremental and radical innovation and on how managers of different ages and human capital are sorted across firms. Firm- and patent-level evidence reveals that firms that are more “open to disruption” are significantly more likely to engage in radical innovation and hire younger managers and inventors with a comparative advantage in radical innovation. However, once the effect of the sorting is factored in, the (causal) impact of manager age on creative innovations, though positive, is small. (JEL D22, L26, M10, M14, O31, O34)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"47 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80669244","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Drago Bergholt, F. Furlanetto, Nicolò Maffei-Faccioli
We use time series techniques to estimate the importance of four main explanations for the decline of the US labor income share: rising firm markups, falling bargaining power of workers, higher investment-specific technology growth, and more automated production processes. Identification is achieved with restrictions derived from a stylized model of structural change. Our results point to automation as the main driver of the labor share, although rising markups have played an important role in the last 20 years. We also find evidence of capital-labor complementarity, suggesting that capital deepening may have raised the labor share. (JEL D21, D43, E25, J51, L23, O33, O41)
{"title":"The Decline of the Labor Share: New Empirical Evidence","authors":"Drago Bergholt, F. Furlanetto, Nicolò Maffei-Faccioli","doi":"10.1257/mac.20190365","DOIUrl":"https://doi.org/10.1257/mac.20190365","url":null,"abstract":"We use time series techniques to estimate the importance of four main explanations for the decline of the US labor income share: rising firm markups, falling bargaining power of workers, higher investment-specific technology growth, and more automated production processes. Identification is achieved with restrictions derived from a stylized model of structural change. Our results point to automation as the main driver of the labor share, although rising markups have played an important role in the last 20 years. We also find evidence of capital-labor complementarity, suggesting that capital deepening may have raised the labor share. (JEL D21, D43, E25, J51, L23, O33, O41)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"41 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80823103","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We explore the short- and long-run implications of tax competition between jurisdictions, where governments can only tax capital at source. We do this in the context of a neoclassical growth model under commitment and capital mobility. We provide a new theoretical perspective on the dynamic capital tax externalities that emerge in this model. Numerically, we show that the net capital tax externality is positive in the short run but converges to zero in the long run. We also find that noncooperative source-based capital taxes are initially positive and slowly decline toward zero. (JEL D62, H25, H71, H73, H87)
{"title":"Dynamic Capital Tax Competition under the Source Principle","authors":"Till O. Gross, P. Klein, M. Makris","doi":"10.1257/mac.20190340","DOIUrl":"https://doi.org/10.1257/mac.20190340","url":null,"abstract":"We explore the short- and long-run implications of tax competition between jurisdictions, where governments can only tax capital at source. We do this in the context of a neoclassical growth model under commitment and capital mobility. We provide a new theoretical perspective on the dynamic capital tax externalities that emerge in this model. Numerically, we show that the net capital tax externality is positive in the short run but converges to zero in the long run. We also find that noncooperative source-based capital taxes are initially positive and slowly decline toward zero. (JEL D62, H25, H71, H73, H87)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"19 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87290492","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We propose a joint theory for interest rate dynamics and bailout decisions. Interest rate spreads are driven by time-varying fundamentals and expectations of future bailouts. Private agents are uncertain about the government's willingness to bail out and learn by observing its actions. The model provides an explanation for why we observe governments initially refusing to bail out borrowers at the beginning of a crisis even if they eventually end up providing a bailout after the crisis aggravates. The typical equilibrium outcome displays hump-shaped spreads and contagion as was the case in the US financial and European debt crises. (JEL E43, G01, G21, H63, H81)
{"title":"Reputation, Bailouts, and Interest Rate Spread Dynamics","authors":"Alessandro Dovis, Rishabh Kirpalani","doi":"10.1257/mac.20190022","DOIUrl":"https://doi.org/10.1257/mac.20190022","url":null,"abstract":"We propose a joint theory for interest rate dynamics and bailout decisions. Interest rate spreads are driven by time-varying fundamentals and expectations of future bailouts. Private agents are uncertain about the government's willingness to bail out and learn by observing its actions. The model provides an explanation for why we observe governments initially refusing to bail out borrowers at the beginning of a crisis even if they eventually end up providing a bailout after the crisis aggravates. The typical equilibrium outcome displays hump-shaped spreads and contagion as was the case in the US financial and European debt crises. (JEL E43, G01, G21, H63, H81)","PeriodicalId":47991,"journal":{"name":"American Economic Journal-Macroeconomics","volume":"10 1","pages":""},"PeriodicalIF":6.0,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90883193","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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