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Recent research finds that markups are rising, suggesting declining competition. But does less price competition mean less Schumpeterian "creative destruction"/industry dynamism? This paper reports the first recent estimates of trends in the displacement of industry-leading firms. Displacement hazards rose for several decades since 1970 but have declined sharply since 2000. Using a production function-based model to explore the role of investments, acquisitions, and lobbying, we find that investments by dominant firms in intangibles, especially software, are distinctly associated with greater persistence and reduced leapfrogging. Software investments by top firms soared around 2000, contributing substantially to the decline. Also, higher markups are associated with greater displacement hazards, linking rents positively with industry dynamism. While technology is often seen as disrupting industry leaders, it now appears to help suppress disruption. Thanks to comments from Victor Bennett, Maarten Goos, Anna Salomons, and participants at seminars at TPRI and Utrecht. Thanks to Ke-Wei Huang, Megan MacGarvie, and Kristina McElheran for help gathering data. This work was supported by the Ewing Marion Kauffman Foundation and Schmidt Futures. The contents of this publication are solely the responsibility of the authors.

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Pay gaps for women and minorities have persisted after accounting for observable differences. Why? If employers can access applicants’ salary histories while bargaining over wages, they can take advantage of past inequities, perpetuating inequality. Recently, a dozen US states have banned employer access to salary histories. We analyze the effects of these salary history bans (SHBs) on private employer wage posting and pay. We develop a theoretical model of firms’ choices between posting wages and bargaining, drawing out the implications of SHBs on wages for different groups of jobs. We then implement a comprehensive causal analysis in a difference-in-differences design. The results show that following SHBs, private employers posted wages more often and increased pay for job changers, particularly for women (6.2%) and non-whites (5.8%). There is also no evidence of adverse selection of workers overall or adverse employer reactions in the short run. Bargaining behavior and the use of salary histories appear to account for much of the persistence of residual wage gaps.

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