The Commoditization of Labor

Masao Fukui, Emi Nakamura and Jon Steinsson

No 35815, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Technical change often simplifies jobs. This increases productivity, but it also makes workers more substitutable–or more "commoditized." Commoditization of labor drives down worker bargaining power: anyone can do the job, implying workers are disposable, which improves the outside option of firms and can lower worker wages. We develop a model that captures both the productivity enhancing and wage depressing effects of commoditizing technical change. Commoditizing technical change involves firms standardizing tasks. This reduces the sensitivity of output to worker quality. Firms benefit because they can more easily fill vacancies for their durable jobs. We show that our model can help explain the divergence between productivity and wages in the service sector, increasing wage markdowns despite falling local concentration, and the decline of the large-firm wage premium.

JEL-codes: E11 J42 (search for similar items in EconPapers)
Date: 2026-09
New Economics Papers: this item is included in nep-bec, nep-lma and nep-min
Note: EFG LS ME
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