Rent Creation and Rent Sharing: New Measures and Impacts on Total Factor Productivity

Abstract

This analysis proposes new measures of rent creation and rent sharing and assesses their impact on productivity on cross‐country‐industry panel data. We find first that: (1) anticompetitive product market regulations positively affect rent creation and (2) employment protection legislation boosts hourly wages, particularly for low‐skill workers. However, we find no significant impact of this employment legislation on rent sharing, as the hourly wage increases are offset by a negative impact on hours worked. Second, using regulation indicators as instruments, we find that rent creation and rent sharing both have a substantial negative impact on total factor productivity. (JEL E22, E24, O30, L50, O43, O47, C23)

Growth impact of climate change and response policies: The advanced climate change long-term (ACCL) model

“…A large body of literature investigates the productivity impact of product and labour market imperfections and of the anti-competitive regulations establishing and supporting them (see Cette et al, 2018, for survey). As shown in numerous papers, this impact could be large (see for instance Cette et al, 2016Cette et al, , 2018. Country fixed effects estimated in the previous relation capture all the factors that may structurally impact TFP and are not explicitly taken into account in relation (3), for instance regulation, the quality of management, corruption, etc.…”

The Long‐Run Dynamics of the Labor Share in Japan

“…Our measure of mark-up (Mark up) is related to the classical Lerner index of market power and computed as a proxy of the price-cost margin, as suggested by Maimaiti et al (2010). The index is the ratio of the value of output (minus indirect taxes and subsidies) over variable costs (calculated as the sum of labor and intermediate inputs costs), assuming that marginal costs can be approximated by average variable costs (as done, for example, in Cette et al, 2019). 9 Table 1 summarizes information on the main variables used in our study.…”

Labor share

“…. ) Cette et al (2019). have shown through an empirical analysis that changes in worker bargaining power (for instance from labor regulation changes) may have an ambiguous impact on the labor share, as they impact in the same direction on both labor productivity and wages.…”