The Impact of Superstar Firms on the Labor Share: Evidence from Belgium

Abstract

The Belgian labor share, measured as the part of GDP going to labor, is declining. This evolution fits into the global secular trend of decreasing labor shares. A novel strand in the literature focusses on its firm-level drivers. Recent research in the United States claims that superstar firms, defined as large firms with a dominant market share, are increasing their market share and link this to the fall of the labor share (Autor, Dorn, Katz, Patterson & Van Reenen, 2017). Using a long time series of Belgian firm-level data from 1985 -2014, we link the rise of superstar firms to the decrease of the labor share in Manufacturing, Wholesale & Retail and Transportation & Storage. These three sectors represent approximately two-thirds of the Belgian economy.

Productivity dispersion, wage dispersion and superstar firms

“…2020), and have a lower firm‐specific labour share despite paying above‐average wages (Gouin‐Bonenfant 2022). The rise of superstar firms is a global phenomenon already used to interpret emerging trends such as declining labour share (Abraham and Bormans 2020; Autor et al . 2020) and rising markups (De Loecker et al .…”