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

Author

Listed:
  • Corey Allan

    (Ministry of Business, Innovation & Employment)

  • David C. Maré

    (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.

Suggested Citation

  • Corey Allan & David C. Maré, 2022. "Who benefits from firm success? Heterogeneous rent-sharing in New Zealand," Working Papers 22_03, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:22_03
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    References listed on IDEAS

    as
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    1. Fabling, Richard & Maré, David C. & Stevens, Philip, 2022. "Migration and Firm-Level Productivity," IZA Discussion Papers 15482, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Wage determination; Rent-sharing; imperfect competition.;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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