New research shows that the rise of ever-larger firms means that workers are getting a shrinking slice of a slower-growing economic pie.

Increasingly, labor accounts for less and less of GDP in most countries. Not only does this trend undermine decades of traditional economic thinking about the stability of the labor share, it heightens concerns about employment and wages. Where are jobs going and who will be most impacted? Theories abound about the extent of the decline and the causes. Some believe that increased use of IT is a key contributor, while others point to increased trade exposure, especially, from China. John Van Reenen, Professor in the MIT Department of Economics and Sloan School of Management (pictured, below), acknowledges these factors, but doesn’t think they are the primary drivers of the labor gap. He and his co-authors offer another explanation in a new working paper,

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