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Concentrating on the Fall of the Labor Share

Listed author(s):
  • Autor, David

    ()

    (MIT)

  • Dorn, David

    ()

    (University of Zurich)

  • Katz, Lawrence

    ()

    (Harvard University)

  • Patterson, Christina

    ()

    (Massachusetts Institute of Technology)

  • Van Reenen, John

    ()

    (MIT Sloan School of Management)

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.

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File URL: http://ftp.iza.org/dp10539.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10539.

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Length: 14 pages
Date of creation: Jan 2017
Publication status: forthcoming in: American Economic Review, Papers and Proceedings
Handle: RePEc:iza:izadps:dp10539
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  1. Lawrence Robert Z., 2015. "Recent Declines in Labor's Share in U.S. Income: A Preliminary Neoclassical Account," Working Paper Series rwp15-034, Harvard University, John F. Kennedy School of Government.
  2. Robert Z. Lawrence, 2015. "Recent Declines in Labor's Share in US Income: A Preliminary Neoclassical Account," Working Paper Series WP15-10, Peterson Institute for International Economics.
  3. Yu Zheng & Raul Santaeulalia & Dongya Koh, 2015. "Labor Share Decline and the Capitalization of Intellectual Property Products," 2015 Meeting Papers 844, Society for Economic Dynamics.
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