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The Commoditization of Labor

Author

Listed:
  • Masao Fukui
  • Emi Nakamura
  • Jón Steinsson

Abstract

Technical change often simplifies jobs. This increases productivity, but it also makes workers more substitutable–or more "commoditized." Commoditization of labor drives down worker bargaining power: anyone can do the job, implying workers are disposable, which improves the outside option of firms and can lower worker wages. We develop a model that captures both the productivity enhancing and wage depressing effects of commoditizing technical change. Commoditizing technical change involves firms standardizing tasks. This reduces the sensitivity of output to worker quality. Firms benefit because they can more easily fill vacancies for their durable jobs. We show that our model can help explain the divergence between productivity and wages in the service sector, increasing wage markdowns despite falling local concentration, and the decline of the large-firm wage premium.

Suggested Citation

  • Masao Fukui & Emi Nakamura & Jón Steinsson, 2026. "The Commoditization of Labor," NBER Working Papers 35815, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35815
    Note: EFG LS ME
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    More about this item

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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