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Seminar: Markups and Declining Labor Shares: Evidence from China

Daniel Berkowitz.jpg

Daniel Berkowitz is a Professor of Economics at University of Pittsburgh. He is a co-managing editor of the Journal of Comparative Economics. He is a well-known Chinese expert and has published extensively on Chinese economy.

Abstract: Around the time that China joined the WTO, its labor shares fell while its product markups converged (e.g. Brandt et al, 2017; Lu and Yu, 2015). We show that markup convergence is a major force driving declining labor shares. We build a theory showing that firms’ labor shares are decreasing and convex in markups. Consistent with this theory, we find the downward impact of markup increases on labor shares in initially unprofitable firms robustly dominates the upward impact of markup declines in initially profitable firms. The impact of markup convergence on labor shares dominates alternative explanations including capital-labor substitution.  

Paper: Markups and Declining Labor Shares: Evidence from China

Location: Mann Library Room 100 

Sponsor: Cornell Institute for China Economic Research (CICER)

Earlier Event: September 20
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