This paper extends the firm heterogeneity model of Melitz (2003) by introducing a new concept of endegenous investments in process R&D. The novelty is that if a firm invests more R&D its expected innovation return hazard rate stochastically dominates the return of less R&D investments. Due to...

This paper extends the firm heterogeneity model of Melitz (2003) by introducing a new concept of endogenous investments in process R&D. The novelty is that if a firm invests more in R&D its expected innovation return hazard rate stochastically dominates the return of less R&D investments. Due to...

Among the phenomena in economics that are not yet well-understood is the fat-tailed (power-law) distribution of firm sizes in the worldś economies. Different mechanisms suggested in the literature to explain this distribution of firm sizes are discussed in the present paper. The paper uses the...

This paper documents that a process of industrial restructuring has been transforming the developed economies, where large corporations are accounting for less economic activity and small firms are accounting for a greatershare of economic activity. Not all countries, however, are experiencing...

The aggregate labor share in U.S. manufacturing declined dramatically over the last three decades: Since the mid-1980's, the compensation for labor declined from 67% to 47% of value added which is unseen in any other sector of the U.S. economy. The labor share of the typical U.S. manufacturing...

The aggregate labor share in U.S. manufacturing declined dramatically over the last three decades: Since the mid-1980's, the compensation for labor declined from 67% to 47% of value added which is unseen in any other sector of the U.S. economy. The labor share of the typical U.S. manufacturing...