9. The division of revenues from unexpected demand shocks

Bastos, P., Monteiro, N. P., & Straume, O. R. (2025). The division of revenues from unexpected demand shocks. Scandinavian Journal of Economics. https://doi.org/10.1111/sjoe.12589This article investigates how unexpected export demand shocks affect firm outcomes and the distribution of earnings between firms and workers in the Portuguese private sector from 2006 to 2018. Unexpected shocks are identified using forecast errors in destination-country GDP growth, aggregated at the firm level according to export exposure. The results show that positive demand surprises increase exports, sales, employment, and investment, and part of the resulting revenue gains is shared with workers through higher wages. However, this rent-sharing is highly unequal: wage gains are concentrated among workers at the top of the firm’s wage distribution and arise through both higher base wages and overtime pay. A key contribution is the role of managerial skill. Firms led by highly skilled managers are more likely to distribute gains via bonuses and performance-based pay, driving inequality within firms. Wage responses are stronger where firm-level bargaining exists and for long-tenured workers. Finally, firms react more strongly to negative than positive shocks, reflecting short-run capacity constraints and asymmetric adjustment.