David Dorn’s research studies the impact of globalization and technological change on labor market and society. His recent work shows that the rapid rise of goods imports from China to the US since the 1990s has had lasting adverse effects on both the careers of workers who were employed in import-competing industries, and on the economic development of cities where such industries were concentrated. These findings challenged and changed the conventional wisdom that trade has few discernible labor market effects. In related work, Dorn showed that the sharp contraction of manufacturing employment in import-exposed local labor markets is associated with broader patterns of social decline, including decreasing marriage rates and rising death tolls due to drug abuse. These same locations also experienced shifts in their electoral outcomes, as voters have become more likely to elect politicians whose policy positions place them on the far left, or more often on the far right of the spectrum of political ideology. The declining support for moderate politicians contributes to a polarization of US congress that makes it increasingly difficult to find bi-partisan solutions for dealing with the country’s economic and social problems.
Dorn’s ongoing research emphasizes that there is not only rising wage inequality among workers, but also a changing distribution of aggregate income between capital and labor. The labor share in national income is decreasing
in many countries, which has a dramatic effect on income inequality: Since capital income is extremely concentrated at the top of the income distribution, a shift of aggregate income away from labor and towards capital will raise relative incomes at the very top, and reduce relative incomes for the majority of the population. Dorn’s work shows that the decline in labor’s income share is associated with a rapidly growing importance of large ‘superstar firms’. An analysis of nearly the full population of US firms indicates that larger firms charge higher mark-ups and are more profitable, which in turn implies that lower labor income share in these firms. During the last three decades, many output markets in the US and Europe have become more concentrated and dominated by large firms, and this increasing importance of ‘superstar firms’ shifts the distribution of aggregate income towards capital. This is a concern both due to growing monopolistic power in output markets, and rising income inequality in society.
David Dorn’s research studies the impact of globalization and technological change on labor market and society. His recent work shows that the rapid rise of goods imports from China to the US since the 1990s has had lasting adverse effects on both the careers of workers who were employed in import-competing industries, and on the economic development of cities where such industries were concentrated. These findings challenged and changed the conventional wisdom that trade has few discernible labor market effects. In related work, Dorn showed that the sharp contraction of manufacturing employment in import-exposed local labor markets is associated with broader patterns of social decline, including decreasing marriage rates and rising death tolls due to drug abuse. These same locations also experienced shifts in their electoral outcomes, as voters have become more likely to elect politicians whose policy positions place them on the far left, or more often on the far right of the spectrum of political ideology. The declining support for moderate politicians contributes to a polarization of US congress that makes it increasingly difficult to find bi-partisan solutions for dealing with the country’s economic and social problems.
Dorn’s ongoing research emphasizes that there is not only rising wage inequality among workers, but also a changing distribution of aggregate income between capital and labor. The labor share in national income is decreasing
in many countries, which has a dramatic effect on income inequality: Since capital income is extremely concentrated at the top of the income distribution, a shift of aggregate income away from labor and towards capital will raise relative incomes at the very top, and reduce relative incomes for the majority of the population. Dorn’s work shows that the decline in labor’s income share is associated with a rapidly growing importance of large ‘superstar firms’. An analysis of nearly the full population of US firms indicates that larger firms charge higher mark-ups and are more profitable, which in turn implies that lower labor income share in these firms. During the last three decades, many output markets in the US and Europe have become more concentrated and dominated by large firms, and this increasing importance of ‘superstar firms’ shifts the distribution of aggregate income towards capital. This is a concern both due to growing monopolistic power in output markets, and rising income inequality in society.
