Concentrating on the Fall of the Labor Share

By David H. Autor, David Dorn, Lawrence F. Katz, Christina Patterson, John Van Reenen. Social Science Research Network, 2017

627 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/4d56c1f0d441663d7a8fe7e6a276ee1eaaae4611

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In Economics and Econometrics

Citations in the corpus

Protecting Competition in the American Economy: Merger Control, Tech Titans, Labor Markets (2019, background): “3 Autor et al. (2017a, 185) state, “Our hypothesis is that technology or market conditions—or their interaction—have evolved to increasingly concentrate sales among firms with superior products or higher productivity, thereby enabling the most successful firms to control a larger market share.” They”
The Firm Size Distribution Across Countries and Skill-Biased Change in Entrepreneurial Technology (2018, methodology): “Sources for data moments: average firm size and entrepreneurship rate from Census Business Dynamics Statistics (BDS) and CPS data as reported in Hipple (2010); size distribution from BDS tabulations and CPS data (Hipple 2010); wage ratio from Autor et al. (2008, Figure 2A); elasticity of average emp”
Investmentless Growth: An Empirical Investigation (2016, positive): “Autor et al. [2017a] and Autor et al. [2017b] link the increase in concentration with the rise of more productive, superstar rms. And Barkai [2017] shows that the pro t share of the US non nancial corporate sector has increased drastically since 1985.”
Rents, Technical Change, and Risk Premia (2017, positive): “Barkai (2017) estimates the part of the capital share accounted for by the profit share and finds a larger increase in the latter than in the former, suggesting a large increase in rents; however his conclusion is partly driven by an estimate of the user cost of capital which builds on the…”
Industry Concentration in Europe and North America (2019, methodology): “A number of studies suggest that industry concentration has increased over recent years in the United States (e.g. Furman and Orszag, 2015; Grullon et al., 2019; Autor et al., 2017b) and to a lesser extent in Japan (Honjo, Doi and Kudo, 2014).”
Increasing differences between firms: market power and the macro-economy (2018, methodology): “In Autor et al. (2017, 2018) we calculate measures of concentration for a consistent set of four-digit (SIC) industries using the U.S. Economic Census between 1982 and 2012.”
What Happened to US Business Dynamism? (2019, neutral): “…papers documents an increasing market concentration in the United States (fact 1; see Furman and Giuliano 2016; Gutiérrez and Philippon 2016, 2017; Autor et al. 2017a, 2017b; Grullon, Larkin, and Michaely 2019; and Barkai 2020, among others).3 Second, several recent studies show an increase in…”
Occupational, industry, and geographic exposure to artificial intelligence: A novel dataset and its potential uses (2021, background): “Literature has suggested that the increased prevalence of ICTs may decrease competition and increase concentration within industries (D. Autor, Dorn, Katz, Patterson, & Van Reenen, 2017; Bessen, 2017; Van Reenen, 2018).”
Racing with or Against the Machine? Evidence from Europe (2016, neutral): “This stresses the importance of the debates about who owns the capital (Freeman, 2015) and the apparently negative impact of recent technological change on labor’s share in national income (Autor et al. 2017; Autor and Salomons 2018; Karabarbounis and Neiman 2014).”
Kaldor and Piketty’s facts: The rise of monopoly power in the United States (2021, neutral): “…focuses on puzzle (5) and (2), Barkai (2016) on (3) and (4), Caballero, Farhi and Gourinchas (2017) on (3) and (4), Piketty and Zucman (2014) on (1), Autor et al. (2017) on the fall in the labor share, Gomme, Ravikumar and Rupert (2015) on (3), De Loecker and Eeckhout (2017) on the rise of markups.”