Concentrating on the Fall of the Labor Share

NBER Working Paper No. 23108

Issued in January 2017

NBER Program(s):Labor Studies, Productivity, Innovation, and Entrepreneurship



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.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w23108

Published: David Autor & David Dorn & Lawrence F. Katz & Christina Patterson & John Van Reenen, 2017. "Concentrating on the Fall of the Labor Share," American Economic Review, American Economic Association, vol. 107(5), pages 180-185, May. citation courtesy of

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