From labor to intermediates : firm growth, input substitution, and monopsony / Matthias Mertens, Benjamin Schoefer ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
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Discovery
1909615234
URN
urn:nbn:de:gbv:3:2-1105088
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, November 2024
Umfang
1 Online-Ressource (III, 46, 28 Seiten, 1,79 MB) : Diagramme
Ausgabevermerk
Sprache
eng
Anmerkungen
Literaturverzeichnis: Seite 43-46, Seite 28
Inhaltliche Zusammenfassung
We document and dissect a new stylized fact about firm growth: the shift from labor to intermediate inputs. This shift occurs in input quantities, cost and output shares, and output elasticities. We establish this fact using German firm-level data and replicate it in administrative firm data from 11 additional countries. We also document these patterns in micro-aggregated industry data for 20 European countries (and, with respect to industry cost shares, for the US). We rationalize this novel regularity within a parsimonious model featuring (i) an elasticity of substitution between intermediates and labor that exceeds unity, and (ii) an increasing shadow price of labor relative to intermediates, due to monopsony power over labor or labor adjustment costs. The shift from labor to intermediates accounts for one half to one third of the decline in the labor share in growing firms (the remainder is due to wage markdowns and markups) and rationalizes most of the labor share decline in growing industries.
Schriftenreihe
IWH-CompNet discussion papers ; 2024, no. 1 (November 2024) ppn:887996302