Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/238154 
Year of Publication: 
2021
Series/Report no.: 
Working Paper No. 2021-06
Publisher: 
University of Massachusetts, Department of Economics, Amherst, MA
Abstract: 
This paper establishes that entry and exit regulate the top half of the profitability distribution in the post-1970 U.S. economy. We, first, document stability in the distribution of total profits earned on tangible, intangible, and financial capital. Whereas a narrower measure of returns on tangible capital, instead, suggests rising dispersion, it fails to capture post-1970 growth in intangible and financial assets. Second, we use quantile decompositions to show that churning - specifically, exit for cause - regulates median and top-end profitability. Thus, the process by which competition drives out unprofitable firms acts to stabilize profit rates in the U.S. economy.
Subjects: 
Profit rates
competition
entry and exit dynamics
JEL: 
B5
L1
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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