The Labor Demand Implications of Brand Capital: Evidence from Trademark Transactions

We study the labor-market effects of brand capital, a demand-side intangible asset that differentiates firms' products. Brand capital is difficult to study because its investments are typically unobserved. We leverage firm-to-firm trademark transfers, which create discrete changes in the ownership of legal rights over established brands. We link the universe of Italian trademark transfers to firm financial statements and matched employer-employee records, allowing us to document how acquiring brand capital affects firm scale, pay, labor composition, and labor shares. In a matched event-study design, trademark acquisitions raise intangible assets by 19%, sales by 8%, and employment by 6%, while leaving average weekly earnings unchanged. Since sales rise more than the wage bill, acquirers' labor shares fall. Employment gains are concentrated in market-facing work, as marketing and sales employment rises roughly twice as much as other employment. More generally, employment growth is concentrated among white-collar and managerial workers. Combining buyers and sellers, trademark transfers increase total sales and employment among transacting firms, and lower their combined labor share. Brand capital thus leads to firms' expansion, shifts labor demand toward market-facing tasks, and provides a micro-level channel through which demand-side intangible capital can lower labor shares.