Essays in Macroeconomics and Labor Economics

Abstract

This dissertation is composed of three chapters. Chapter 1 documents a divergence in the evolution of the labor share between services and non-services industries in the United States since 1980. Over this period, the labor share for services industries increased by an average of 6 percentage points, whereas for the rest of industries it decreased by an average of 14 percentage points. By exploiting industry-level data, I find that the divergence is occurring in the large majority of sub-industries, and is correlated with changes in labor intensity across sub-industries. In order to understand the underlying mechanisms behind this divergence, I build a quantitative two-sector model and show that the decline in the aggregate labor share and the divergence across industries are both consistent with the observed declining trend in the relative price of investment goods. Critically, differences in the substitutability between capital and labor, and differences in technical change across industries can account for the divergence. Chapter 2 (with Sergio Salgado) documents that part of the increase in top wealth inequality in the United States since the 1980s relates to the rise of ``superstar firms.'' We build a novel owner-firm matched panel dataset using information from the official records of the Securities and Exchange Commission, Forbes, and Compustat. Using this data we document that: (i) firms at the upper end of the market value distribution are disproportionately controlled by individuals at the top of the wealth distribution, (ii) these individuals invest a large fraction of their net worth in one or two main firms which we interpret as evidence of lack of asset diversification, and (iii) the output, employment, and market value shares accounted for by these firms has increased substantially over the last 30 years. Chapter 3 (with Simone Civale and Fatih Fazilet) develops and tests a discretization method to calibrate a Markov chain that features non-zero skewness and high kurtosis.