The Question of Superstar Nonprofits
An Investigation into the Relationship Between Labor Share and Industry Concentration in the Nonprofit Sector
This paper tests four predictions of the “superstar firms” model put forward in Autor, Dorn, Katz, Patterson, & Van Reenen (2019) against US nonprofit organization microdata from the Internal Revenue Service. These predictions are: i) there is increasing industry revenue concentration within broad nonprofit category groups; ii) increasing industry concentration is associated with decreasing labor share; iii) the decrease in aggregate labor share is mostly due to a reallocation of sales between organizations and not a decrease in labor share within organizations; iv) this reallocation effect is largest in industries that are experiencing larger increases in concentration. The second and fourth predictions were not supported in the data while there is some evidence for the first and third predictions in some categories. However, there does not appear to have been a large change in either industry concentration or labor share in most categories.