Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/226186
Authors: 
Wagner, Konstantin
Year of Publication: 
2020
Series/Report no.: 
IWH Discussion Papers 21/2020
Abstract: 
I study the effect of increasing competition on financial performance through labour leverage. To capture competition, I exploit variation in product market contestability in the U.S. airline industry. First, I find that increasing competitive pressure leads to increasing labour leverage, proxied by labour share. This explains the decrease in operating profitability through labour rigidities. Second, by exploiting variation in human capital specificity, I show that contestability of product markets induces labour market contestability. Whereas affected firms might experience more stress through higher wages or loss of skilled human capital, more mobile employee groups benefit from competitions through higher labour shares.
Subjects: 
competition
labour leverage
labour share
threat of entry
JEL: 
G39
J31
L93
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.