Research Details

Abstract

Public firms with high labor productivity have a large and expanding labor market competitive advantage. Using firm-specific stock returns to estimate heterogeneous labor supply elasticities by labor productivity and across time, calibrated to a dynamic wage posting model featuring costly hiring, I estimate wage markdowns which largely explain: a wide cross-sectional labor share spread by productivity; the public firm aggregate labor share decline from 1991-2014; and productive firms’ high valuations given their modest investment rates. Cashflows from wage markdowns are worth two-fifths of aggregate capital income. Market power over skilled workers may play an important role in these patterns.

Type

Working Paper

Author(s)

Bryan Seegmiller

Date Published

2023

Citations

Seegmiller, Bryan. 2023. Valuing Labor Market Power: The Role of Productivity Advantages.