CREAT: Census Research Exploration and Analysis Tool

Antitrust Enforcement Increases Economic Activity

October 2023

Working Paper Number:

CES-23-50

Abstract

We hand-collect and standardize information describing all 3,055 antitrust law suits brought by the Department of Justice (DOJ) between 1971 and 2018. Using restricted establishment-level microdata from the U.S. Census, we compare the economic outcomes of a non-tradable industry in states targeted by DOJ antitrust lawsuits to outcomes of the same industry in other states that were not targeted. We document that DOJ antitrust enforcement actions permanently increase employment by 5.4% and business formation by 4.1%. Using an event-study design, we find (1) a sharp increase in payroll that exceeds the increase in employment, meaning that DOJ antitrust enforcement increases average wages, (2) an economically smaller increase in sales that is statistically insignificant, and (3) a precise increase in the labor share. While we cannot separately measure the quantity and price of output, the increase in production inputs (employment), together with a proportionally smaller increase in sales, strongly suggests that these DOJ antitrust enforcement actions increase the quantity of output and simultaneously decrease the price of output. Our results show that government antitrust enforcement leads to persistently higher levels of economic activity in targeted industries.

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:
econometric, merger, labor, patent, regulation, profit, competitor, policymakers, discrimination, enforcement, federal

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Ordinary Least Squares, Columbia University, County Business Patterns, Federal Reserve Bank, Census Bureau Longitudinal Business Database, Federal Trade Commission, Supreme Court, Longitudinal Business Database, Federal Reserve System, Retail Trade, Department of Justice, General Accounting Office, Boston College, Economic Census, Wholesale Trade, North American Industry Classification System, European Commission, Census Bureau Disclosure Review Board, Disclosure Review Board, Federal Statistical Research Data Center

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