Brent Neiman

Declining Labor Shares and the Global Rise of Corporate Savings

The stability of the labor share is a key foundation in macroeconomic models. We document, however, that the global labor share has significantly declined over the last 30 years. This decline was associated with a significant increase in corporate saving, generally the largest component of national saving. We relate the labor share to corporate saving empirically and theoretically using a model featuring CES production and imperfections in the flow of funds between households and corporations. These two departures from the standard neoclassical model imply that the labor share fluctuates and that corporate saving affects macroeconomic allocations. We argue that it is important to study the labor share and corporate saving jointly, and offer a unified explanation for their trends. A global decline in the cost of capital beginning around 1980 induced firms to shift away from labor and toward capital, financed in part with an increase in corporate saving.

The impact of post-9/11 visa policies on travel to the United States

American and foreign businesses, politicians, and media have all pointed to post-9/11 changes in visa policies as being responsible for the sharp decline in travel to the United States following the attacks. Using an empirical model which distinguishes the impact of visa policy from economic and country-specific factors, we find that changes in visa policy were not important contributors to the decrease in travel to the United States. Rather, the reduction in entries was largest among travelers who were not required to obtain a visa.

Measuring Productivity Growth in Asia: Do Market Imperfections Matter?

Recent research reports contradictory estimates of productivity growth for the newly industrialized economies (NIEs) of Asia. In particular, estimates using real factor prices find relatively rapid TFP growth; estimates using quantities of inputs and output find relatively low TFP growth. The difference is particularly notable for Singapore, where the difference is about 2-1/4 percentage-points per year. We show that about 2/3 of that difference reflects differences in estimated capital payments. We argue that these differences reflect economically interesting imperfections in output and capital markets, including sizeable economic profits in Singapore and government-directed credit. We derive a measure of technology growth, corrected for the imperfections that we quantify.

Measuring the Miracle: Market Imperfections and Asia's Growth Experience

A clear understanding of the rapid development of the newly industrialized economies (NIEs) of Asia remains elusive, with disputes over the roles of technology growth, capital accumulation, and international trade and investment. Most notably, alternative approaches to growth accounting yield contradictory results: Estimates using quantities of inputs and output (the primal approach) find slow TFP growth, whereas estimates using real factor prices (the dual approach) find relatively rapid TFP growth. Further, the growth accounting studies report constant or increasing labor shares in most of the NIEs, inconsistent with theories emphasizing the importance of international trade in Asia’s development. We reconcile these apparent contradictions by taking account of economically interesting imperfections in output and capital markets, such as sizeable economic profits and government-directed credit. In Singapore, where the growth accounting disparity is largest, these market imperfections essentially fostered a two-sector economy in which some firms, part of a “favored†sector, received preferential treatment and reaped economic profits. We describe the dynamics of this two-sector framework and derive measures of technology growth, corrected for the imperfections that we quantify. We then discuss implications for broader disputes about Asian development

International Currencies and Capital Allocation

We establish currency as an important factor shaping global portfolios. Using a new security-level dataset, we demonstrate that investor holdings are biased toward their own currencies to such an extent that countries typically hold most of the foreign debt securities denominated in their currency. While large firms issue in foreign currency and borrow from foreigners, most firms issue only in local currency and do not directly access foreign capital. These patterns hold broadly across countries except for the United States, as foreign investors hold significant shares of US dollar bonds. The share of dollar-denominated cross-border holdings surged after 2008.

The Rise in Household Spending Concentration

(Preliminary and Incomplete) Household consumption bundles look increasingly different from each other. Using detailed scanner data from 2004-2015, we document that households are concentrating more and more spending on their preferred products. These products, however, are not “superstars” that are purchased by everyone. Rather, household purchases are increasingly idiosyncratic. As a result, aggregate product concentration has actually declined even as product concentration within households has risen. This trend is pervasive across geographic locations and product categories and even holds within demographic and income groups. The growth in household concentration is associated with households purchasing new and dropping old products and is most rapid in retail chains that introduce the most new products. Further, those households with more concentrated product spending pay more for the products they purchase. These patterns suggest firms are increasingly able to introduce customized products or that consumers can better find them, and carry implications for market power and consumer welfare. ∗We thank David Argente for providing exceptional research assistance and Tom Wollmann for helpful comments and suggestions. Our analysis is based on data from The Nielsen Company (US), LLC and marketing databases provided by the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. The conclusions drawn from these Nielsen data are those of the researchers and do not reflect the views of Nielsen. Nielsen is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported herein.Over the last 15 years, the typical household has increasingly concentrated its spending on a few preferred products. However, this is not driven by “superstar” products capturing larger market shares. Instead, households increasingly purchase different products from each other. As a result, aggregate spending concentration has decreased. We develop a model of heterogeneous household demand and use it to conclude that increasing product variety drives these divergent trends. When more products are available, households select products better matched to their tastes. This delivers welfare gains from selection equal to about half a percent per year in the categories covered by our data. Our model features heterogeneous markups because producers of popular products care more about their existing customers while producers of less popular niche products care more about generating new customers. Surprisingly, our model matches the observed trends in household and aggregate concentration without any change in aggregate market power.

Stickiness, Synchronization, and Exchange Rate Passthrough in Intrafirm Trade Prices

About forty percent of all U.S. international trades occurs between related parties, or intrafirm, such as trades between a parent and subsidiary of the same multinational corporation. Using a good-level dataset that distinguishes arm’s length from intrafirm trades, I demonstrate that for the set of differentiated products, intrafim prices are characterized by 1) less stickiness, 2) less synchronization, and 3) greater exchange rate passthrough. These differences emerge in a simulated dynamic model in which input exporters that are integrated, unlike arm’s length exporters, seek to maximize combined manufacturer and distributor profits.