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Abstract:

cover
CEP Discussion Paper
Technical Change and Superstar Effects: Evidence from the Roll-Out of Television
Felix Koenig
November 2019
Paper No' CEPDP1663:
Full Paper (pdf)

JEL Classification: J31; J23; O33; D31


Tags: superstar effect; inequality; top incomes; technical change

"Superstar effects" generate large compensation differentials among similarly talented individuals. Are superstar effects amplified by technological innovations that extend the scale over which talent is deployed? I test this idea in the market for entertainers, using the roll-out of television as a natural experiment which provides clean variation in a scale-related technological change. The launch of a local TV station increases top entertainers' incomes, resulting in a twofold increase in top-percentile income share, while reducing employment and incomes of lower-level talents. These results show clear evidence of superstar effects and are inconsistent with canonical models of skill-biased technological change.