Testing the superstar-firm hypothesis: the Italian case

The fall of labour share that most advanced economies have endured in the last 40 years has spurred new interest in a field of economics whose intellectual debate seemed to be settled since the 1960s (Kaldor, 1961). Starting from the 1990s, several authors have been trying to propose potential explanations of this phenomenon. In spite of that, to this day researchers have yet to reach agreement on such question. The topic generates particular interest due to the well-established connection between functional distribution of income and inequality. In fact, most industrialised nations which have recorded a fall of labour share in the last few decades have also seen their income inequality rise. Of the many theories available, there is a growing strand of literature which emphasises the role of large companies in driving down the labour share. Autor et al. (2020) have named this theory “the superstar-firm hypothesis” and have built a model “the superstar firm model” to put such hypothesis to the test on 6 American sectors in the period 1982-2012. Their findings substantiate the thesis that superstar firms might in fact be behind the fall of labour share in the 6 sectors. In this work, I try to replicate the analysis of Autor et al. (2020) employing 7 Italian sectors . Despite the short time-horizon of my data (2011-2019), my results seem coherent with the predictions that the superstar-firm model suggests