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Why Are Superstar Firms the Best Places to Work? Competitive Advantage in Amenity Provision and the Declining Labor Share

Author

Listed:
  • Ioannis Branikas
  • Briana Chang
  • Harrison Hong
  • Nan Li

Abstract

Why are superstar firms the best places to work? We document that worker satisfaction scales nearly twice as fast as wages with firm size. Our assignment model distinguishes selection (talent sorting) from competitive advantage (amenity provision); amenity-cost advantages cause utility to rise more steeply than wages. Using Glassdoor data, competitive advantage explains roughly half of the utility increase with firm size. As workers increasingly value non-pecuniary amenities, superstar firms with a cost advantage substitute wages for amenities, raising profits and reducing the measured labor share all while raising worker utility. Declining labor shares need not signal deteriorating worker welfare.

Suggested Citation

  • Ioannis Branikas & Briana Chang & Harrison Hong & Nan Li, 2025. "Why Are Superstar Firms the Best Places to Work? Competitive Advantage in Amenity Provision and the Declining Labor Share," NBER Working Papers 33870, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33870
    Note: CF LS
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    More about this item

    JEL classification:

    • G0 - Financial Economics - - General
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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