Those new service sectors jobs — lots of ’em!

…we find that total employment rises substantially in industries with rising concentration.  this is true even when we look at total employment of the smaller firms in these industries.  This evidence is consistent with our view that increasing concentration is driven by new ICT-enabled technologies that ultimately raise aggregate industry TFP.  It is not consistent with the view that concentration is due to declining competition or entry barriers…as those forces will result in a decline in industry employment.

That is from a new paper by Chang-Tai Hsieh and Esteban Rossi-Hansberg.  The paper presents a larger picture too:

…the secular changes the U.S. economy has experienced for the last four decades…amount to a new industrialization process.  One that allows firms to expand geographically and deliver its goods and services to customers locally.  We have argued that this evolution was the result of an underlying technological change that led to reductions in variable costs (and establishment-level fixed costs) in exchange for larger firm-level fixed costs.



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