Industrial Robots, Superstar Firms, andLabor Income Share: Opportunities andHidden Risks

Chen Dong*1, Yao Di1, Zheng Yulu2

1 School of Economics, Shandong University, Jinan, China

2 Business School, China University of Political Science and Law, Beijing, China

Abstract: The diffusion of industrial robot technology has coincided with increasingdivergence in firms’ market shares, potentially leading to enhanced market power andshifts in the distribution of factor income. This paper investigates the impact of industrialrobot adoption on firms’ labor income share and explores the underlying mechanisms, withparticular attention to the rise of superstar firms. The findings suggest that, overall, the useof industrial robots contributes to an increase in labor’s income share, reflecting a generallyfavorable trend for labor’s position in primary income distribution. This effect, however, ismarkedly heterogeneous across different types of firms, regions, and industries. A significantconcern is that robot adoption strengthens firms’ relative market power within industries,fueling the emergence of superstar firms. These firms jointly influence labor income sharethrough both a competition effect and a demonstration effect: the former is the main causeof declining labor shares, while the latter introduces a new channel through which labor’sshare is further reduced. Although antitrust policies can help improve labor’s income share,they are not well-suited to curbing the market power expansion driven by industrial robotadoption. Thus, the concern over superstar firms’ suppression of labor income remains.Amid the intensifying trend of “machines replacing humans”, this paper offers empiricalinsights into how to address the distributional implications brought about by the rise ofsuperstar firms.

Keywords: Industrial robot adoption; Labor income share; Superstar firms; Competition

JEL Classification Codes: D33; D42; O14

DOI: 10.19602/j.chinaeconomist.2025.09.06