Why Are Superstar Firms the Best Places to Work? Competitive Advantage in Amenity Provision and the Declining Labor Share

Ioannis Branikas, Briana Chang, Harrison Hong and Nan Li

No 33870, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Why are superstar firms the best places to work? We document that worker satisfaction scales nearly twice as fast as wages with firm size. Our assignment model distinguishes selection (talent sorting) from competitive advantage (amenity provision); amenity-cost advantages cause utility to rise more steeply than wages. Using Glassdoor data, competitive advantage explains roughly half of the utility increase with firm size. As workers increasingly value non-pecuniary amenities, superstar firms with a cost advantage substitute wages for amenities, raising profits and reducing the measured labor share all while raising worker utility. Declining labor shares need not signal deteriorating worker welfare.

JEL-codes: G0 G3 G39 J3 J31 J33 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-cfn, nep-com, nep-hrm and nep-lma
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