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Abstract for:

Concentrating on the Fall of the Labor Share

David  Autor,  David  Dorn,  Lawrence F.  Katz,  Christina  Patterson,  John  Van Reenen,  April 2017
Paper No' CEPDP1476: | Full paper (pdf)
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Keywords: labour share, concentration, superstar firms

JEL Classification: J3

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This Paper is published under the following series: CEP Discussion Papers
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In this paper, we discuss an explanation for the fall in share of labour in GDP based on the rise of “superstar firms.” If globalization or technological changes advantage the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms with high profit margins and a low share of labor in firm value-added and sales. As the importance of superstar firms increases, the aggregate labour share will fall. This hypothesis suggests that sales will increasingly concentrate in a small number of firms and that industries where concentration rises most will have the largest declines in the labour share. We find support for these predictions aggregating up micro-data from the US Census 1982-2012.

This paper has been published as:
Concentrating on the Decline in Labor's Share, John Van Reenen, David Autor, David Dorn, Lawrence F. Katz and Christina Patterson, American Economic Review: Papers and Proceedings, Volume 107, Issue 5, May 2017