The Fall of the Labor Share and the Rise of Superstar Firms
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.