The mightier, the stingier: Firms’ market power, capital intensity, and the labor share of income

Pawel Adrjan

MPRA Paper from University Library of Munich, Germany

Abstract: What determines the proportion of a firm’s income that workers receive as compensation? This paper uses longitudinal firm data from a period of substantial labor share variation to understand the firm-level determinants of the labor share of income—a question that has so far only been addressed with country- and sector-level data. Firms with greater market power and a higher ratio of capital to labor allocate a smaller proportion of their value added to workers. These results suggest that firm-level drivers play a key role in the evolution of the aggregate labor share, which have declined significantly since the 1970s.

Keywords: Labor Share; Employee Compensation; Factor Income Distribution; Market Power; Capital Intensity (search for similar items in EconPapers)
JEL-codes: D33 E25 J24 J30 (search for similar items in EconPapers)
Date: 2018-01-13
New Economics Papers: this item is included in nep-eur, nep-hrm, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83925

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