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Concentrating on the Fall of the Labor Share

Author

Listed:
  • 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)

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.

Suggested Citation

  • Autor, David & Dorn, David & Katz, Lawrence & Patterson, Christina & Van Reenen, John, 2017. "Concentrating on the Fall of the Labor Share," IZA Discussion Papers 10539, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10539
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    References listed on IDEAS

    as
    1. Robert Z. Lawrence, 2015. "Recent Declines in Labor's Share in US Income: A Preliminary Neoclassical Account," NBER Working Papers 21296, National Bureau of Economic Research, Inc.
    2. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    labor share; sales concentration;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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