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Labor share and super firms

Summary:
I discussed on several occasions before the worsening of income distribution and the squeeze of the labor share in total income. Figure below provides updated information. Professor Autor and some of his co-authors suggest this in part might result from the rise of the 'superstar firm.' In other words, Facebook, Google (Alphabet), Amazon, Apple, etc and the winner take all economy. This paper (h/t Santiago Capraro) argues that this results from market power reflected in higher mark ups.Note that the paper by Autor et. al. suggests that superstar firms are more efficient and as their share of the market increase, their higher productivity and reduced labor force leads to a lower share for labor in the aggregate. It is mostly a technological effect for them.I have my doubts, of course,

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I discussed on several occasions before the worsening of income distribution and the squeeze of the labor share in total income. Figure below provides updated information.
Labor share and super firms
Professor Autor and some of his co-authors suggest this in part might result from the rise of the 'superstar firm.' In other words, Facebook, Google (Alphabet), Amazon, Apple, etc and the winner take all economy. This paper (h/t Santiago Capraro) argues that this results from market power reflected in higher mark ups.

Note that the paper by Autor et. al. suggests that superstar firms are more efficient and as their share of the market increase, their higher productivity and reduced labor force leads to a lower share for labor in the aggregate. It is mostly a technological effect for them.

I have my doubts, of course, about any story that leaves out the relative bargaining power of the labor force, and in this story the regulatory environment that has allowed the information age firms to have such large shares of the market. But that's another story.

Matias Vernengo
Econ Prof at @BucknellU Co-editor of ROKE & Co-Editor in Chief of the New Palgrave Dictionary of Economics

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