Declining competition
Diez and al. use a firm-level dataset on private and listed firms from 20 countries and find that there has been a global decline in competition. In particular they argue that:
- Global markups have increased by 6 percent between 2000 and 2015;
- The increase in markups is mostly explained by the behavior of high-markup firms;
- The increase in markups is concentrated in advanced economies;
- There is a non-monotonic (U-shaped) relationship between firm size and markups; and
- The increase in markups is mostly explained by within-firm increases among incumbent firms and, to a lower extent, by market share reallocation towards high-markup entrants.
Global Declining Competition
Authors:Federico J Diez, Jiayue Fan, Carolina Villegas-Sánchez
From:IMF, ESADE Business School
Has the global labor share declined?
We show that cross-country comparisons of corporate labor shares [defined as the share of corporate value added going to wages, salaries and benefits] are affected by differences in the delineation of corporate sectors. While the US excludes all self-employed and most dwellings from the corporate sector, other countries include large amounts of both — biasing labor shares downwards. We propose two methods to control for these differences and obtain ‘harmonized’ non-housing labor share series. Contrary to common wisdom, the harmonized series remain stable across all major economies except the US, where the labor share still declines, primarily due to manufacturing. These new facts cast doubts on most technological explanations for the labor share decline.
Is there really a global decline in the (non-housing) labour share?
By: Germán Gutiérrez, Sophie Piton – Bank of England
