The Decline in Rent Sharing

Brian Bell, Paweł Bukowski and Stephen Machin

Journal of Labor Economics, 2024, vol. 42, issue 3, 683 - 716

Abstract: The evolution of rent sharing is studied. Based on a panel of the top 300 publicly quoted British companies over 35 years and using excess stock market returns to patenting activity as an instrument for economic rents, the paper reports evidence of a significant fall over time in the pass-through from rents to wages. It confirms that wages do respond to firm-level shocks to economic rents, but by significantly less after 2000 than during the 1980s and 1990s. The evidence of decline is robust, corroborated with alternative instruments and industry-level analysis for the United States and the European Union.

Date: 2024
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