PRI Discussion Paper Series (No.21A-4)

The Decline in the Labor Share: Evidence from Japanese
Manufacturers’ Panel Data

Senior Visiting Scholar, Policy Research Institute, Ministry of Finance/
Senior Lecturer, Aichi-Gakuin University
Koyo Miyoshi

May 2021

The views expressed in this paper are those of theauthors and not those of the Ministry of Finance or
the Policy Research Institute.

Research Department Policy Research Institute, MOF
3-1-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8940, JapanTEL 03-3581-4111

The Decline in the Labor Share: Evidence fromJapanese Manufacturers’ Panel Data
Koyo Miyoshi ∗†‡Abstract
This paper replicates Kehrig and Vincent (2021) using Japanese data andtests whether the overall labor share decline is led by an increase in low-laborshare ﬁrms. The results can be summarized as follows. The overall labor sharein Japan declined until around 2006, but then rose during the recession in 2008
and then leveled oﬀ. The results of this paper are similar to the results shownin Autor et al. (2020) and Kehrig and Vincent (2018) for the United States in
the following points. First, although the labor share of median ﬁrms did not rise
while the overall labor share was declining, the rate of decline in the labor shareof the median ﬁrm was slower than the overall rate of decline. Second, the valueadded share of ﬁrms with a low labor share increased while their salary share did
not increase when the overall labor share declined. Third, entry and exit are notimportant to the decline in overall labor share, as in the United States.
The results of this paper diﬀer from Autor et al. (2020) and Kehrig andVincent (2018) in the following points. First, the role of ﬁrms with an extremely
low labor share, say under decile, which is a good explanation of the change
in labor share in the United States, is ∑limited in Japan. Second, the changein actual labor share is very similar toωi,initial λit , the product of the initial∗

Address for Correspondence: Koyo Miyoshi, Senior Visiting Scholar, Policy Research Institute,
Ministry of Finance/ Aichi-Gakuin University, 12 Araike, Iwasaki-cho Nisshin, Aichi, 470-0195, Japan
TEL: +81-561-73-1111 FAX: +81-561-73-9305 E-mail: kmiyo@dpc.agu.ac.jp.
†
The author gratefully acknowledges research support, especially regarding the supply of data
provided by the Japanese Ministry of Economy, Trade and Industry used in this study.
‡
The author is grateful to Masahiro Abe, Kiseung Kim, Kozo Kiyota, Naoto Jinji, Ryohei Hayashi,
Katushiko Hori, Tsukasa Matsuura, Ryosuke Nakamura, Shinpei Sano, and Yasuyuki Sugiyama for
their extremely helpful and constructive comments on an earlier draft, and also wishes to thankseminar participants at Chuo University, Tokai University, Fukuoka University, Ministry of Finance, theTokyo Labor Economics Workshop, Nagoya International Economics Study Group, Kansai Economics
Workshop, AASLE 2018 Conference at Seoul, Ryukyu Economics Workshop, KEBA Fall International
Conference 2018, JEA Meeting 2019 at Musashi university, JEW at the University of Hawaii and the
Research Center for Advanced Policy Studies at Kyoto University. This report is based on the personal
opinions of the author and does not indicate the oﬃcial opinions of the institutions to which the author
belongs.

1

value-added share and labor share at the time, which suggests that ﬁrms with alarge value-added share are lowering their labor share in Japan.

Keywords: Labor share

JEL Classiﬁcation Number: F16 D33

2

Introduction

1

The labor share, once said to be very stable (Keynes (1939) and Solow (1958)), hasbeen declining globally at least for the last 20 years. (Blanchard (1997), Karabarbounis
and Neiman (2014), and Dao et al. (2017)). In the U.S., the overall labor-share decline
is led by some ﬁrms (Autor et al. (2020) and Kehrig and Vincent (2018)). The labor
share of a typical (median) ﬁrm rose during 1967–2012, while the overall labor sharein manufacturing declined. Kehrig and Vincent (2018) and Autor et al. (2020) showthat the share of value-added of ﬁrms with a low labor share has been increasing,
contributing to the decline of the overall labor share in the United States. However, it
is not yet clear whether this will be true in other countries where there are not as manymonopolies as in the United States.
The aim of this paper is to verify that this tendency can be seen in Japan, which
is signiﬁcantly diﬀerent from the United States, in the following two ways. First,
although Autor et al. (2020) show that sample ﬁrms with a high mark-up and/or
low ﬁxed overhead labor will be low-labor-share ﬁrms, Adachi and Saito (2020) showthat Japanese ﬁrms show a smaller increase in markups relative to the U.S. until 2006.
Second, Acemoglu and Restrepo (2020) show that robot adoption at the industry levelis associated with low labor share and employment in the United States. However,
Adachi et al. (2020) show that in Japan robots and labor are complementary until
2017.
Therefore, we replicate Autor et al. (2020) and Kehrig and Vincent (2021) using3the Basic Survey of Japanese Business Structure and Activities (BSJBSA). First, we
compare the overall labor share with the labor share of the median ﬁrm in Japanesemanufacturing and see whether the overall labor share is declining and whether thelabor share of the median ﬁrm is increasing as in the United States. Second, to see
how the entry and exit of ﬁrms aﬀect changes in labor share, we compare overall labor
share, calculating the labor share using a balanced panel. Third, to investigate how the
proportion of low-labor-share ﬁrms contributed to the overall decline in labor share,
we decompose the change in overall labor share to the following four, (1) within-ﬁrm
components, (2) a between-ﬁrms (reallocation) component, (3) an exiting component,and (4) an entrant component. Fourth, to see the role of low-labor-share ﬁrms on
the overall decline in labor share, we compare actual labor share with the labor sharecalculated on the sample of ﬁrms excluding the lowest decile. Fifth, to investigate
whether this change was caused by a decrease in payroll or an increase in value-added,
we calculate payroll and value-added share of each labor-share decile by year. Sixth,
to investigate whether the ﬁrms with a low labor share initially increased the valueadded share or whether the ﬁrms with a large value-added share initially decreased
the labor share, we calculate the following two hypothetical labor shares,
and

∑

∑

ωi,initial λit

ωit λi,initial , and compare them with actual aggregate labor share (where ω is thevalue-added share and λ is the labor share).
The results can be summarized as follows. The overall labor share in Japan also
declined until around 2006, but then rose during the recession in 2008 and then leveled4

oﬀ. The results of this paper are similar to the results for the United States shownin Autor et al. (2020) and Kehrig and Vincent (2018) in the following points. First,
although the labor share of median ﬁrms did not rise during the period when the overalllabor share was declining, the rate of decline in the labor share of the median ﬁrm was
slower than the overall rate of decline. Second, the value-added share of ﬁrms witha low labor share increased while the salary share of those did not increase when theoverall labor share declined. Third, entry and exit are not important for the decline inoverall labor share, as in the United States.
The results of this paper diﬀer from Autor et al. (2020) and Kehrig and Vincent(2018) in the following points. First, the role of ﬁrms with an extremely low labor
share, say under decile, which is a good explanation of the change in labor share in the
United States, is limited in Japan. Second, the change in actual labor share is very
similar to∑ωi,initial λit , the product of initial value-added share and labor share at thetime, which suggests that ﬁrms with a large value-added share are lowering their labor
share in Japan.

2

Empirical Analysis

This paper uses the Basic Survey of Japanese Business Structure and Activities 1995–
2016. This survey, which is compiled by Japan’s Ministry of Economy, Trade andIndustry, is conducted every year. The Basic Survey of Japanese Business Structure
and Activities, Japanese METI deﬁned value-added as follows. Value-added = Operat5

ing proﬁt + Total payroll + Depreciation expenses + Welfare expenses + Real estateand movables property rental + Taxes and public imposition. It should be noted that
this value-added is gross value-added and does not include dividends from overseas.
Although this survey contains ﬁrm-level information on imports and imports from afﬁliates, several points should be noted. First, this survey does not contain informationon the self-employed. So this paper does not analyze the labor share of gross domestic
product but merely the payroll share as in many studies, such as Kehrig and Vincent(2021). Second, although the role of small-to-medium enterprises in Japan is important,manufacturing ﬁrms with less than 20 employees produce 10% of total value-added andhire 25% of total employees, ﬁrms with less than 50 employees or capital less than
30 million yen are not included in the survey. However, these statistics cover a wide
range of ﬁrms compared with other Japanese statistics such as the Financial Statements
Statistics of Corporations (Ministry of Finance). Third, salary information for on-callworkers, who have increased recently in Japan, is not available. Fourth, the deﬁnitionof payroll was changed in 2007. Until 2006, “payroll” included severance pay while
the employer’s share of social security payment was excluded. After 2007, severance
pay is excluded from payroll and the employer’s share of social security payment andseverance pay is included as “welfare payment.” Therefore, the labor share, which isdeﬁned as

payroll, before 2006 cannot be compared with that after 2006. So, wevalue-added

divide our sample period into pre-2006 and post-2006.
First, we compare the overall labor share with the labor share of the median ﬁrm

6

in Japanese manufacturing as in Kehrig and Vincent (2021). The results are shownin Figure 1. The left panel shows the results from the 1996–2006 sample and theright panel shows the results from the 2007–2016 sample. The green dashed line shows
the labor share of the ﬁrm at the median. The changes in overall labor share are
depicted as the blue dashed line. It should be noted that the trend in the labor shareof the gross domestic product may be diﬀerent from that of manufacturing because
Japanese manufacturers hire fewer females and more standard workers compared withother industries. Therefore, we include the labor share calculated from the National
Accounts. The pink dashed line shows the labor share calculated using System of
National Account. The red line shows the labor share of the ﬁrm at the 10% decile.
Figure 1 can be summarized as follows. First, the overall labor share is always below themedian and shows a similar change in lower, say, 10%, decile of labor share as in Kehrig
and Vincent (2018). Second, in the left panel, which shows the result for 1996–2006,
the overall labor share decreases faster than the median ﬁrm’s labor share. Unlike theresult for the United States shown in Kehrig and Vincent (2018), the labor share of
the median ﬁrm is not increasing. Third, in the right panel, which shows the result for
2007–2016, the overall labor share increases faster than the median ﬁrm’s labor sharefrom 2007 to 2009. In Figure 1, we can see there are diﬀerences in changes in the labor
share between the overall and the median ﬁrm in Japan.
To investigate the role of entry and exit of ﬁrms on this diﬀerence in changes in thelabor share between overall and the median ﬁrm, we compare the labor share overall

7with the labor share calculated using our balanced panel. The results are shown in
Figure 2. In Figure 2, the blue dotted line shows the change in labor share calculatedusing our balanced panel and the red line shows the change in the labor share calculated using the whole sample. it can be seen that these two changes are very similar,
suggesting that the role of entry and exit is very limited, similar to the result for theUnited States shown in Kehrig and Vincent (2018).
Figure 1 suggests the diﬀerence in changes in the labor share between overall andthe median ﬁrm may be caused either by low-labor-share ﬁrms increasing their valueadded share or large value-added-share ﬁrms decreasing their labor share. To examine
the role of value-added reallocation between ﬁrms on the change in the overall labor
share, this paper follows Autor et al. (2020) and decomposes the changes in the overalllabor share.
The decomposition method is as follows. Overall labor share can be written as
∑

λit =

as λit =∑ωit λit , where λit is the labor share of individual ﬁrm i at time t, deﬁnedsalaryitand ωit is the value-add share of ﬁrm i at time t, deﬁned asvalue-addit

ωit = ∑value-addit . Then, the change in labor share can be decomposed as follows.
value-addit∆λ = ∆λ¯s + ∆(∑(ωi − ω¯s )(λi − λ¯s ))s¯ ) + ωE,2 (λE,2¯ − λ¯s,2 ),+ωX,1 (λ¯s,1 − λX,1

(1)

where subscript s means ﬁrms extant both at t = 1 and t = 2 in an industry, E means∑
Entrants and X means eXiters. We call (1) ∆λ¯s the within part, (2) ∆( (ωi − ω¯s )(λi −¯ − λ¯s,2 ) the entrant part, and (4) ωX,1 (λ¯s,1 − λX,1
¯ )λ¯s ))s the between part, (3) ωE,2 (λE,28the exiter part. Autor et al. (2020) adopt this decomposition using U.S. data anddemonstrate that between-components dominate in almost all industries. The decomposition results imply that models that assume a representative ﬁrm, as Karabarbounis
and Neiman (2014), may not be suitable. Böckerman and Maliranta (2012) adopt asimilar decomposition method using Finnish manufacturing plant-level data and also
demonstrate that between-components dominate. This paper adopts this decomposition and compares the results with Böckerman and Maliranta (2012) and Autor et al.
(2020).
The decomposition results are shown in Figure 3. During 1996–2006, when theJapanese overall labor share was declining, the second part, called the “between” part,is largest as in Autor et al. (2020) and Böckerman and Maliranta (2012). This means
not all ﬁrms uniformly decrease their labor share during this period when the labor
share was decreasing. By contrast, during the period 2007–2016, when the overalllabor share was increasing, the “within part” dominates. The exit of high-labor-shareﬁrms and the entry of low-labor-share ﬁrms may cancel each other out over two periods.
To see if this change in overall labor share is a change in payroll or a change invalue-added, we calculate the payroll and value-added shares of each labor-share decile
by year as in Kehrig and Vincent (2018). The results are shown in Figures 4–7. Figures
4 and 5 show the cumulative value-added share for each labor-share decile. Figures 6
and 7 show the cumulative payroll share for each labor-share decile. Figures 4 and 6
show the diﬀerence between 1996 (left panel) and 2006 (right panel) and Figures 5 and97 show the diﬀerence between 2007 (left panel) and 2016 (right panel). Although the
payroll share of low-labor-share ﬁrms, shown in Figures 6 and 7, seems not to change
during this period, the value-added share of low-labor-share ﬁrms, shown in Figure 4,
increased between 1996 and 2006, as in the United States Kehrig and Vincent (2018).
That suggests that the decline of labor share is caused by value-added, especially in lowlabor-share ﬁrms, although labor input and/or price of labor seem relatively constant.
To see how large is the role of low-labor-share ﬁrms overall to the decline in labor
share, we compare actual labor share with the labor share calculated from the sample
consisting of ﬁrms above the lowest decile. The results are shown in Figure 8. The blue
dotted line shows the change in labor share calculated using the sample excluding thelowest decile, the red line shows the change in labor share calculated using the wholesample. Unlike the result for the United States shown in Kehrig and Vincent (2018),
the two moves are very similar. That suggests that the role of low-labor-share ﬁrms is
not as strong as for the United States.
To investigate whether the company with a low labor share initially increased its
value-added share, or the company with a large share of value-added decreased its
labor share, we calculate the following two hypothetical labor shares,∑

ωit λi,initial with the actual overall labor share∑∑ωi,initial λit andωit λit (where ω is the value-added

share and λ is the labor share) as in Kehrig and Vincent (2018). The ﬁrst is the productof the initial value-added share and the labor share at each point in time and is called
the “Big player” hypothetical change as in Kehrig and Vincent (2018) to take account10

of the possibility that large ﬁrms can lower their labor share more than their smaller
peers. The second is the product of the initial labor share and the value-added shareat each point in time and is called the “Superstar” hypothetical change to take accountof the possibility that the low-labor-share ﬁrms at the initial point increase their valueadded share. The results are shown in Figure 9. Both the left panel and right panel
show that the “Big player” hypothetical change is quite similar to the actual change.
This is in stark contrast to the results for the United States in Kehrig and Vincent(2018). This suggests that the decline in overall labor share in Japan is due to initiallylarge value-added share ﬁrms lowering their labor share.

3

Results and Conclusion

The results can be summarized as follows. The overall labor share in Japan declined
until around 2006, but then rose during the recession in 2008 and then leveled oﬀ.
Not all ﬁrms uniformly decreased their labor share during this ﬁrst period. Japanesemanufacturers are similar in the following points to U.S. manufacturers. First, theJapanese decline in overall labor share seems to be due to the contribution of some lowlabor-share ﬁrms. Although the labor share of median ﬁrms does not rise during theperiod when the overall labor share was declining, the rate of decline in the labor shareof the median ﬁrm was slower than the overall rate of decline. The value-added share ofﬁrms with a low labor share increased while their salary share did not increase when theoverall labor share declined. Second, entry and exit are not important for the decline in11overall labor share, as in the United States. The diﬀerences causing the changes in theoverall labor share between the United States and Japan are as follows. First, the roleof ﬁrms with extremely low labor share, say within the ﬁrst decile, is limited in Japan.
Second, the change in actual labor share is very similar to∑ωi,initial λit , the product of

initial value-added share and labor share at the time, suggests that ﬁrms with a highvalue-added share are lowering their labor share in Japan.
The reason only some ﬁrms were contributing to the decline in overall Japaneselabor share until 2006 is a direction for further research. Although Autor et al. (2020)
suggest that ﬁrms with high markups and/or low ﬁxed overhead labor costs will be lowlabor-share ﬁrms, Adachi and Saito (2020) show there are smaller increases in markups
relative to the U.S. until 2006. Acemoglu and Restrepo (2020) show that robot adoption
at the industry level is associated with low labor share and employment in the UnitedStates. However, Adachi et al. (2020) show that robots and labor are complementary
until 2017 in Japan.
Oﬀshoring is another possible factor. If ﬁrms outsource their high labor-share activities to low-wage countries, the domestic labor share will decrease, even if markups areunchanged. Although Kiyota and Maruyama (2018) ﬁnd that oﬀshoring was associatedwith increasing demand for highly skilled labor in Japan, Adachi and Saito (2020) showthat over half the decline in the overall decline in labor share in Japan can be explainedby foreign factor augmentation. Therefore, oﬀshoring may be the reason why only someﬁrms were contributing to the decline in Japanese overall labor share.

12References
Acemoglu, Daron and Pascual Restrepo (2020) “Robots and Jobs: Evidence from US
Labor Markets,” Journal of Political Economy, Vol. 128, No. 6, pp. 2188–2244.
Adachi, Daisuke and Yukiko Saito (2020) “Multinational Production and Labor
Share,”Technical Report 20-E-012, Research Institute of Economy, Trade and Industry.
, Daiji Kawaguchi, and Yukiko Saito (2020) “Robots and Employment: Evidence from Japan, 1978-2017,”Technical report, Research Institute of Economy,
Trade and Industry.
Autor, David, David Dorn, Lawrence F Katz, Christina Patterson, and John Van
Reenen (2020) “The Fall of the Labor Share and the Rise of Superstar Firms,” Quarterly Journal of Economics, Vol. 135, No. 2, pp. 645–709.
Blanchard, Oliver (1997) “The Medium Run,” Brookings Papers on Economic Activity,
Vol. 2, pp. 89–158.
Böckerman, Petri and Mika Maliranta (2012) “Globalization, creative destruction, andlabour share change: evidence on the determinants and mechanisms from longitudinal
plant-level data,” Oxford Economic Papers, Vol. 64, No. 2, pp. 259–280.
Dao, Mai Chi, Mitali Das, Zsoka Koczan, and Weicheng Lian (2017) “Why Is La-

13bor Receiving a Smaller Share of Global Income?

Theory and Empirical Evi-dence,”Technical report, International Monetary Fund.
Karabarbounis, L. and B. Neiman (2014) “The Global Decline of the Labor Share,”
The Quarterly Journal of Economics, Vol. 129, No. 1, pp. 61–103, feb, DOI: 10.
1093/qje/qjt032.
Kehrig, Matthias and Nicolas Vincent (2018) “Growing Productivity without Growing
Wages: The Micro-Level Anatomy of the Aggregate Labor Share Decline,”Technicalreport, Economic Research Initiative at Duke (ERID).
and(2021) “The Micro-level Anatomy of the Aggregate Labor Share

Decline,” Quarterly Journal of Economics.
Keynes, John Maynard (1939) “Relative Movements of Real Wages and Output,” Economic Journal, Vol. 49, No. 193, pp. 34–51.
Kiyota, Kozo and Sawako Maruyama (2018) “On the demand for female workers inJapan: the role of ICT and oﬀshoring,” Asian Economic Papers, Vol. 17, No. 2, pp.
25–46.
Solow, Robert M. (1958) “A skeptical note on the constancy of relative shares,” American Economic Review, Vol. 48, No. 4, pp. 618–631.

14

15

0.5

0.6

0.7

0.8

0.9

Notes:

1998

2001

year

2004

sna

medianaggregate

90%

10%

legend

0.4

0.5

0.6

0.7

0.8

2008

2010

2012

year

2014

2016

sna

medianaggregate

90%

10%

legendsample.

(2) The left panel shows the results from the 1996–2006 sample and the right panel shows the results from the 2007–2016(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1995–2016).

labor_share

Figure 1: Overall and Firm-Level Labor Shares in the Japanese Manufacturing Sector

labor_share

16

0.51

0.54

0.57

1998

2001

year

2004

Balanced panel

actuallegend

0.48

0.50

0.52

0.54

2008

2010

2012

year

2014

2016

Balanced panel

actuallegend(3) The blue dotted line shows the labor share calculated using the balanced panel.

sample.

(2) The left panel shows the results from the 1996–2006 sample and the right panel shows the results from the 2007–2016(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1996–2016).

Notes:

labor_share

Figure 2: Overall vs Survivors: 1996–2006

labor_share

17

withinNotes:

−0.1

0.0

0.1

betweenexiternames

entrant

difference

−0.1

0.0

0.1

withinbetweenexiternames

entrant

difference

sample.

(2) The left panel shows the results from the 1996–2006 sample and the right panel shows the results from the 2007–2016(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1995–2016).

value

Figure 3: The Decomposition Results

value

18

Notes:~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

labor_share

0.0093558204663858

0.00393586241606245

labor_share

0.00992807464044067

0.00858943940314529~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

0.0419700081596374

0.0490742185145502

0.104851610651251

0.10865220242738

0.119407756063726

0.154894262074599

0.183494268012152

0.218371778989878

0.020921682259289

0.0338127510598004

0.0608028994321107

0.0887003664906087

0.125143047461514

0.168262299340157

0.231424430178272

0.258407221959041(3) Each bar shows the value-added share of each labor-share decile.

(2) The left panel shows the results from the 1996 sample and the right panel shows the results from the 2006 sample.

(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1995–2016).

share_of_value_added

Figure 4: Value-added share of each labor-share decile: 1996 vs 2006

share_of_value_added

19

Notes:~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

labor_share

0.0038549489830589

0.00443055087695927

labor_share

0.00418192343356447

0.0129799264104044~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

0.0167377265332949

0.0190060870966718

0.0674981755710444

0.0754637756152962

0.155124658160022

0.198351944491541

0.214751794792699

0.245028965322807

0.0141105253394972

0.0459340756726556

0.0641926178210419

0.0941601233437091

0.157627653469272

0.177177978210327

0.188304158169887

0.241082390686247(3) Each bar shows the value-added share of each labor-share decile.

(2) The left panel shows the results from the 2007 sample and the right panel shows the results from the 2016 sample.

(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1995–2016).

share_of_value_added

Figure 5: Value-added share of each labor-share decile: 2007 vs 2016

share_of_value_added

20

Notes:~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

labor_share

0.00128657440330028

0.000560377065858976

labor_share

0.0150404720705069

0.00238459663689925~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

0.0171364597120679

0.052164878445042

0.0690293034707682

0.083136300400104

0.136260325609145

0.158604955419061

0.232013823658277

0.235326906811727

0.0148555912253503

0.0343346824779469

0.0543675637610056

0.0891405236214083

0.13312608124689

0.162013584862274

0.24776648600225

0.261450513100116(3) Each bar shows the payroll share of each labor-share decile.

(2) The left panel shows the results from the 2007 sample and the right panel shows the results from the 2016 sample.

(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1996–2016).

share_of_payroll

Figure 6: Payroll share of each labor-share decile: 1996 vs 2006

share_of_payroll

21

Notes:~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

labor_share

0.000582081253587544

0.00161079626004334

labor_share

0.00602279053968806

0.00868610440242092~010% ~020% ~030% ~040% ~050% ~060% ~070% ~080% ~090% ~100%

0.0075997536817533

0.027597794920398

0.0326080759521118

0.106505553100769

0.108688727611922

0.17622790391764

0.264075022408957

0.270092296613173

0.0155309225855957

0.0247750371599223

0.0499648120334318

0.0993245252226617

0.132761934344973

0.179032166641983

0.213368116667547

0.274945584681422(3) Each bar shows the payroll share of each labor-share decile.

(2) The left panel shows the results from the 2007 sample and the right panel shows the results from the 2016 sample.

(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1995–2016).

share_of_payroll

Figure 7: Payroll share of each labor-share decile: 2007 vs 2016

share_of_payroll

22

0.55

0.60

0.65

1998

2001

year

2004

Non−LLactuallegend

0.50

0.55

0.60

2008

2010

2012

year

2014

2016

Non−LLactuallegend(3) The blue dotted line shows the labor share calculated using the sample without the lowest decile.

sample.

(2) The left panel shows the results from the 1996–2006 sample and the right panel shows the results from the 2007–2016(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1996–2016).

Notes:

labor_share

Figure 8: Overall labor share vs labor share of ﬁrms without lowest decile

labor_share

23

Notes:

0.51

0.54

0.57

0.60

1998

2001

year

2004

Superstar

Big_player

Balanced panellegend

0.48

0.50

0.52

0.54

2008

2010

2012

year

2014

2016

Superstar

Bigplayer

Balanced panellegendhypothetical labor share calculated as∑∑

ωit λi,initial . The red dotted line shows theωi,initial λit . (where ω is value-added share and λ is labor share).

(3) Blue dashed line shows the hypothetical labor share calculated as(2) The left panel shows the results from the 2007 sample and the right panel shows the results from the 2016 sample.

(1) Sources: Basic Survey of Japanese Business Structure and Activities by METI (1995–2016).

labor_share

Figure 9: “Big player” vs “Superstar”

labor_share