Who benefits from firm success? Heterogeneous rent-sharing in New Zealand

Corey Allan and David Maré

No 22_03, Working Papers from Motu Economic and Public Policy Research

Abstract: We continue our examination of inclusive growth at the firm level by examining heterogeneity in rent sharing in New Zealand using linked employer-employee data. We test for heterogeneity in rent sharing across a range of worker and firm characteristics including gender, ethnicity, age, qualifications, tenure, firm size, firm age, and industry. We also refine our measure of quasi-rents and estimate the level of excess quasi-rents per worker, or the amount of rents above the threshold beyond which rent sharing occurs. We find that between 20% and 30% of workers are in firms that earn zero excess rents. These workers are concentrated in the hospitality, administrative services, and retail industries and are more likely to be women, to be M?ori or Pacific peoples, and have lower-level qualifications. We find an overall rent-sharing elasticity of 0.03, which is equivalent to a $38 increase in annual wages in response to a $1,000 increase in excess rents per worker. We find differences in rent sharing by levels of highest qualification, tenure, and ethnicity. We find no differences in rent sharing by firm size or firm age. Rent sharing is similar across industries, with workers in most industries receiving between $1,500 and $2,000 of rents per year. The auxiliary finance and professional, scientific, and technical services sectors share the most, while grocery retailing, food and beverage manufacturing and utilities share the least. Insurance type behaviour by firms is consistent with the variation in rent sharing across industries, although differences in bargaining power are also likely to play a role in explaining differences in rent sharing across groups.

Keywords: Wage determination; Rent-sharing; imperfect competition. (search for similar items in EconPapers)
JEL-codes: D22 J10 J3 J71 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2022-03
New Economics Papers: this item is included in nep-bec, nep-hrm, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Who Benefits from Firm Success? Heterogenous Rent Sharing in New Zealand (2022)
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