Rent Creation and Rent Sharing: New Measures and Impacts on Total Factor Productivity

Gilbert Cette (1, 2) , Jimmy Lopez (3) , Jacques Mairesse (4)

1 Centre de recherche de la Banque de France
2 AMSE - Aix-Marseille Sciences Economiques
3 DGEI-DEMS - Banque de France - Direction Générale des Etudes et des relations Internationales, Direction des Etudes Microéconomique et Structurelles
4 CREST - Centre de Recherche en Économie et Statistique

This analysis proposes new measures of rent creation and rent sharing and assesses their impact on productivity on cross-country-industry panel data. We find first that: (1) anticompetitive product market regulations positively affect rent creation and (2) employment protection legislation boosts hourly wages, particularly for low-skill workers. However, we find no significant impact of this employment legislation on rent sharing, as the hourly wage increases are offset by a negative impact on hours worked. Second, using regulation indicators as instruments, we find that rent creation and rent sharing both have a substantial negative impact on total factor productivity. (JEL E22, E24, O30, L50, O43, O47, C23)

Keywords: product market regulations; labor market regulations; mark-up; rent-sharing; TFP

Domains: Humanities and Social Sciences; Economics and Finance

Gilbert Cette, Jimmy Lopez, Jacques Mairesse. Rent Creation and Rent Sharing: New Measures and Impacts on Total Factor Productivity. Economic Inquiry, 2019, 57 (4), pp.1915-1938. ⟨10.1111/ecin.12809⟩. ⟨hal-02279411⟩