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.

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Pete Klenow

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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.

Read the full paper here [pdf]

Host: Hans Holter

Published Dec. 19, 2018 1:49 PM - Last modified May 9, 2019 3:34 PM