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Technical change and superstar effects: evidence from the roll-out of television

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  • Felix Koenig

Abstract

Technical change that improves economies of scale can generate fast income growth among top earners at the expense of everyone else. I test this classic "superstar model" in the labor market for entertainers where the historic roll-out of television led to a natural experiment in scale-related technological change. The launch of a local TV station multiplied audiences of top entertainers nearly fourfold and resulted in a 50% increase of the top percentile's income share, a more right-skewed income distribution, and significant income losses for lower ranked entertainers. The results confirm the predictions of the "superstar model" and are at odds with canonical models of skill-biased technological change.

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  • Felix Koenig, 2019. "Technical change and superstar effects: evidence from the roll-out of television," CEP Discussion Papers dp1663, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1663
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    Cited by:

    1. Morten Olsen & Joshua Gottlieb & David Hemous & Jeffrey Clemens, 2017. "The Spill-over Effects of Top Income Inequality," 2017 Meeting Papers 332, Society for Economic Dynamics.
    2. Marcus Biermann, 2021. "Remote talks: changes to economics seminars during Covid-19," CEP Discussion Papers dp1759, Centre for Economic Performance, LSE.
    3. Rachel Scarfe & Carl Singleton & Paul Telemo, 2021. "Extreme Wages, Performance, and Superstars in a Market for Footballers," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(1), pages 84-118, January.
    4. Boken, Johannes & Draca, Mirko & Mastrorocco, Nicola & Ornaghi, Arianna, 2023. "The Returns to Viral Media: The Case of US Campaign Contributions," CEPR Discussion Papers 18337, C.E.P.R. Discussion Papers.
    5. Kim, Woojin, 2022. "Television and American consumerism," Journal of Public Economics, Elsevier, vol. 208(C).
    6. Biermann, Marcus, 2021. "Remote talks: changes to economics seminars during Covid-19," LSE Research Online Documents on Economics 114429, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Superstar Effect; inequality; top incomes; technical change;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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