Stories

How "superstar firms" contribute to rising inequality

Paul Sakuma / AP

The global marketplace has made it possible for superstars in music, sports, and even business administration to earn more money than ever before in what economists have labeled a "winner-take-all economy," whereby the best earn outsized rewards while the rest struggle.

New research from economists David Autor and Lawrence Katz suggests that this dynamic is also present in competition between corporations. They write that the rise of "superstar firms" is one cause of the recent decline in the share of corporate profits going to workers rather than shareholders.

Why it matters: Since the 1980s, industry concentration has risen across the developed world, and the growing power of corporations that are dominating their respective industries has enabled them to suppress wages.