Concentrating on the Fall of the Labor Share

14 Pages Posted: 5 Feb 2017

See all articles by David H. Autor

David H. Autor

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

David Dorn

University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Lawrence F. Katz

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Christina Patterson

Federal Reserve Banks - Federal Reserve Bank of New York

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 4 versions of this paper

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.

Keywords: labor share, sales concentration

JEL Classification: E24, J31, L11

Suggested Citation

Autor, David H. and Dorn, David and Katz, Lawrence F. and Patterson, Christina and Van Reenen, John Michael, Concentrating on the Fall of the Labor Share. IZA Discussion Paper No. 10539. Available at SSRN: https://ssrn.com/abstract=2911477

David H. Autor (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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David Dorn

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Lawrence F. Katz

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Christina Patterson

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

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John Michael Van Reenen

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