Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147146
Authors: 
Rettl, Daniel A.
Stomper, Alex
Zechner, Josef
Year of Publication: 
2016
Series/Report no.: 
CFS Working Paper Series 549
Abstract: 
We analyze global data about electricity generation and document that the risk exposure of a firm's owners and its workers depends on competitors' ability or willingness to change their output in response to productivity shocks. Competitor inflexibility appears to be a risk factor: the sales of firms with more inflexible competitors respond more strongly to aggregate sales shocks. As a consequence, competitor inflexibility also affects the stability of firms' total wage- and dividend-payments. Firms with relatively flexible competitors appear to smoothen both wages and dividends, but an increase in competitor inflexibility is associated with less dividend-smoothing and more wagesmoothing. Our evidence supports the idea that labor productivity risk associated with competitor inflexibility should be borne by firms' shareholders, rather than by their workers.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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