Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217006 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8255
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper considers a two sectors heterogeneous firms model where firms' specific production technology and capital intensity are endogenously determined through business dynamics. It shows that a shock to the relative price of investment goods is followed by the entrance of new firms characterized by higher capital intensity of production and lower labor income share. Using ORBIS firm-level data of the US economy, the paper finds strong and robust evidence confirming that new firms enter the market with higher capital intensity. Furthermore, firms-level data are used to show that the labor share is significantly affected by capital intensity, as well as by firms' size and firms' mark-up.
Subjects: 
firms dynamics
firms heterogeneity
labor income share
capital intensity
capital technological change
ORBIS microdata
JEL: 
E21
E22
E25
Document Type: 
Working Paper
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