Comparing Micro-evidence on Rent Sharing from Three Different Approaches

Sabien Dobbelaere, Jacques Mairesse

NBER Working Paper No. 16220
Issued in July 2010
NBER Program(s):   PR

Empirical labor economists have resorted to estimating the responsiveness of workers╩╝ wages on firms╩╝ ability to pay to assess the extent to which employers share rents with their employees. This paper compares this labor economics approach with two other approaches that rely on standard micro production data only: the productivity approach for which estimates of the output elasticities of labor and materials and data on the respective revenue shares are needed and the accounting approach which boils down to directly computing the extent of rent sharing from firm accounting information. Using matched employer-employee data on 60,294 employees working in 9,849 firms over the period 1984-2001 in France, we quantify industry differences in rent-sharing parameters derived from the three approaches. We find a median absolute extent of rent sharing of about 0.30 using either the productivity or the accounting approach. Only exploiting firm-level information brings this median rent-sharing parameter down to 0.16 using the labor economics approach. Controlling for unobserved worker ability further reduces the median absolute extent of rent sharing to 0.08. Our analysis makes clear that the three different approaches face important trade-offs. Hence, empirical economists interested in establishing that profits are shared should select the appropriate approach based on the particular research question and on the data at hand.

download in pdf format
   (1153 K)

email paper

This paper is available as PDF (1153 K) or via email.

This paper was revised on July 21, 2015

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16220

Users who downloaded this paper also downloaded these:
Card, devicienti, and Maida w16192 Rent-sharing, Holdup, and Wages: Evidence from Matched Panel Data
Jaumandreu and Mairesse w16221 Innovation and Welfare: Results from Joint Estimation of Production and Demand Functions
Dobbelaere and Mairesse w13975 Panel Data Estimates Of The Production Function And Product And Labor Market Imperfections
Dobbelaere, Kiyota, and Mairesse w19059 Product and labor market imperfections and scale economies: Micro-evidence on France, Japan and the Netherlands
Basu, Pascali, Schiantarelli, and Serven w15579 Productivity, Welfare and Reallocation: Theory and Firm-Level Evidence
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us