10 Questions
How does the shift-share decomposition methodology differ from the Olley-Pakes and Melitz-Polanec methodologies?
The shift-share decomposition gives greater weight to within-firm changes of initially larger firms, whereas the other methodologies use an unweighted mean of within-firm changes.
What two components are found to contribute to the fall in the labor share?
The between-firm reallocation component and the within-firm component
What is the relationship between increases in concentration and changes in labor share among the largest firms?
Increases in concentration are associated with decreases in labor share among the largest firms.
What is the significance of the covariance term in the shift-share analysis?
It is a non-trivial component, but appears to be related to outliers rather than increases in concentration.
Who have documented the fall in the labor share as an international phenomenon?
Karabarbounis and Neiman (2013) and Piketty (2014)
What type of data is used to explore the international evidence of the fall in labor share?
Industry and firm-level data from various OECD countries
What is the primary source of the within-firm contribution to the decline in labor share?
Larger firms
What is the role of outliers in the shift-share analysis?
They appear to affect the covariance term, making it sensitive to the double difference.
What is the relationship between the between-firm reallocation component and the decline in labor share?
The between-firm reallocation component contributes to the decline in labor share.
What is the significance of the within-firm component in the shift-share decomposition?
It becomes more important as the analysis progresses.
Test your understanding of the recent decline in labor share and its relationship with capital prices, including the role of Information and Communication Technologies (ICT) and production technologies. Explore the arguments put forth by Karabarbounis and Neiman (2013) and more.
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