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Concentrating on the Fall of the Labor Share

David Autor¹; David Dorn²; Lawrence F. Katz³; Christina Patterson¹; John Van Reenen⁴

¹ MIT Department of Economics, Cambridge, MA 02142 (e-mail: ) · ² Department of Economics, University of Zürich, 8001 Zürich, Switzerland (e-mail: ) · ³ Department of Economics, Harvard University, Cambridge, MA 02138 (e-mail: ) · ⁴ MIT Department of Economics and Sloan School, Cambridge, MA 02142 (e-mail: )

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.

DOI

10.1257/aer.p20171102

Volume

107 (5)

Pages

180-185

Language

en

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