Concentrating on the Fall of the Labor Share
- (pp. 180-85)
Abstract
The recent fall of labor's share of GDP in numerous countries is well-documented, but its causes are poorly understood. We sketch a "superstar firm" model where industries are increasingly characterized by "winner take most" competition, leading a small number of highly profitable (and low labor share) firms to command growing market share. Building on Autor et al. (2017), we evaluate and confirm two core claims of the superstar firm hypothesis: the concentration of sales among firms within industries has risen across much of the private sector; and industries with larger increases in concentration exhibit a larger decline in labor's share.Citation
Autor, David, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen. 2017. "Concentrating on the Fall of the Labor Share." American Economic Review, 107 (5): 180-85. DOI: 10.1257/aer.p20171102Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D33 Factor Income Distribution
- E23 Macroeconomics: Production
- E25 Aggregate Factor Income Distribution
- L13 Oligopoly and Other Imperfect Markets
- L25 Firm Performance: Size, Diversification, and Scope