Rent Sharing, Aggregate Saving and Growth

We investigate the effects on saving and growth of the rent sharing between firm owners and workers documented in recent empirical work. In an overlapping-generations framework, more rent sharing is found to increase growth. This result also holds in a model with a single generation of infinitely-lived consumers in which some consumers are patient and save and others are impatient but credit-constrained and simply consume all of current income. This latter result is surprising since rent sharing effectively redistributes income from savers to non-savers, yet raises aggregate saving