Article by John Van Reenen and Christina Patterson

In America, labor’s share has been on the decline for about three decades, and it has accelerated since the turn of the century. The fall has also occurred in most other countries. In the U.S. the share of income that workers take home each year now hovers around 60%. … In a recent paper, we put forward a different story based on the rise of superstar firms. More and more industries have become “winner take most” over the last 40 years. Firms with a cost or quality advantage have always enjoyed higher market shares. In the “good old days,” more-productive companies would take a bigger slice of the market, but there would be plenty left over for their rivals. By contrast, the new behemoths of our age capture a much larger fraction — if not all — of their market. Think of Google, Apple, and Amazon in the digital sphere, or Walmart and Goldman Sachs in the offline world.

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