Testing the superstar firm hypothesis

Arbeitspapier

The superstar firms model provides a compelling explanation for two simultaneously occurring phenomena: the rise of concentration in industries and the fall of labor shares. Our empirical analysis confirms two of the underlying assumptions of the model: the market share increases and the labor share decreases with increasing firm-level total factor productivity, providing support for the superstar firms' hypothesis. However, we find no evidence for the underlying mechanism of the model, the distribution of fixed labor costs. Instead, we observe increasing returns to scale that also explain lower labor shares of larger firms.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1849

Classification and Topics

• Classification: Wirtschaft ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data) ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: superstar firms ; total factor productivity ; labor share ; market share ; firm size

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schiersch, Alexander ; Stiel, Caroline
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/214231
• Last update: 10.03.2025, 11:44 AM CET