Pete Klenow, Stanford University
Department seminar. Pete Klenow is a Professor at Stanford University. He will present a paper entitled "A Theory of Falling Growthand Rising Rents" co-authored by Philippe Aghion, Antonin Bergeaud, Timo Boppart, and Huiyu Li.
Growth has fallen in the U.S., while ﬁrm concentration and proﬁts have risen. Meanwhile, labor’s share of national income is down, mostly due to the rising market share of low labor share ﬁrms. We propose a theory for these trends in which the driving force is falling ﬁrm level costs of spanning multiple markets, perhaps due to accelerating ICT advances. In response, the most efﬁcient ﬁrms spread into new markets, thereby generating a temporary burst of growth. Because their efﬁciency is difﬁcult to imitate, less efﬁcient ﬁrms ﬁnd their markets more difﬁcult to enter proﬁtably and innovate less. Even the most efﬁcient ﬁrms do less innovation eventually because they are more likely to compete with each other if they try to expand further.
Host: Hans Holter