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

Abstract The fall of labor’s share of GDP in the United States and many other countries in recent decades is well documented but its causes remain uncertain. Existing empirical assessments typically rely on industry or macro data, obscuring heterogeneity among firms. In this article, we analyze micro panel data from the U.S. Economic Census since 1982 and document empirical patterns to assess a new interpretation of the fall in the labor share based on the rise of “superstar firms.” If globalization or technological changes push sales toward the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms, which have high markups…

• NS
  National Science Foundation
• AP
  Alfred P. Sloan Foundation
• SR
  Smith Richardson Foundation
• SW
  Sid W. Richardson Foundation
• A
  Accenture
• SN
  Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung

  Award: 155804
• EA
  Economic and Social Research Council

  Award: ES/M010341/1