Economie et Statistique / Economics and Statistics n° 520-521 - 2020 Varia
Market Power and Labor Share
Arthur Bauer and Jocelyn Boussard
Abstract
Secular trends in market power and labor share have important implications for inequality and allocative efficiency. Studying them requires comprehensive, detailed firm-level data spanning several decades. Using a novel database on the universe of French firms between 1984 and 2016, we document a rise in concentration since the early 1990s. Despite a stability of the aggregate labor share, larger firms with lower labor shares gained market shares, especially in industries where concentration increased the most. The markup of the typical firm, considered here as a proxy of its market power, has decreased, but market shares reallocation toward larger firms contributed to an increase in the aggregate markup. In particular, we do not find that the rise in concentration is accompanied by an increase in market power at the top. Finally, we show that taking into account reallocation across firms is essential to understand how the trends in market power have shaped the dynamics of the aggregate labor share in France.
Article (pdf, 1 Mo )
Online Appendices (pdf, 1 Mo )
Citation: Bauer, A. & Boussard, J. (2020). Market Power and Labor Share. Economie et Statistique / Economics and Statistics, 125–146.
https://doi.org/10.24187/ecostat.2020.520d.2034