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Concentrating on the fall of the labor share

Autor, David and Dorn, David and Katz, Lawrence F. and Patterson, Christina and Van Reenen, John (2017) Concentrating on the fall of the labor share. CEP Discussion Papers, CEPDP1476. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP1476

Abstract

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 suggeststhat 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.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2017 The Authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 21 Jul 2017 09:53
Last Modified: 29 Aug 2017 10:21
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/83607

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