The Fall of the Labor Share and the Rise of Superstar Firms
David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, John Van Reenen
Summary
The authors document the decline in the labor share of income across US industries and propose a 'superstar firm' explanation: industries are increasingly dominated by highly productive, low-labor-share firms. Using US Economic Census data and cross-country evidence, they show that reallocation of economic activity toward these firms, rather than declines within typical firms, drives the aggregate fall in the labor share. Industries with rising concentration show the largest labor-share declines.
Key findings
- The aggregate labor share fell largely because activity shifted toward 'superstar' firms with high productivity and low labor shares, not because the typical firm's labor share fell.
- Industries that became more concentrated (higher sales going to top firms) experienced the steepest labor-share declines.
- The pattern holds across most US sectors and is corroborated by international data.
Subjects & keywords
Cite this paper
David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, & John Van Reenen (2020). The Fall of the Labor Share and the Rise of Superstar Firms. The Quarterly Journal of Economics. https://doi.org/10.1093/qje/qjaa004
@article{autor2020fall,
author = {David Autor and David Dorn and Lawrence F. Katz and Christina Patterson and John Van Reenen},
title = {The Fall of the Labor Share and the Rise of Superstar Firms},
journal = {The Quarterly Journal of Economics},
year = {2020},
doi = {10.1093/qje/qjaa004},
url = {https://doi.org/10.1093/qje/qjaa004}
}