ECONOMIC REPORT OF THE PRESIDENT

Table 1-2
Change in Market Concentration by Sector, 1997-2007
Industry
Percentage Point Change in Revenue Share
Earned by 50 Largest Firms, 1997‐2007
Transportation and Warehousing 12.0
Retail Trade 7.6
Finance and Insurance 7.4
Real Estate Rental and Leasing 6.6
Utilities 5.6
Wholesale Trade 4.6
Educational Services 2.7
Accommodation and Food Services 2.6
Professional, Scientific and Technical Services 2.1
Administrative/ Support 0.9
Other Services, Non-Public Admin -1.5
Arts, Entertainment and Recreation -2.3
Health Care and Assistance -3.7
Note: Concentration ratio data is displayed for all North American Industry Classification
System (NAICS) sectors for which data is available from 1997 to 2007.
Source: Census Bureau.
be affected by other factors such as credit risk, but such factors are unlikely
to explain the full gap.
Market Concentration and the Distribution of Profits
Another piece of evidence for the rising importance of rents is
increased market concentration across a number of industries. Table 1-2
shows that the share of revenue earned by the largest firms increased across
most industries between 1997 and 2007. This observation complements a
range of studies that find increasing concentration in air travel, telecommunications,
banking, food-processing, and other sectors of the economy.
Increased concentration may play a role in the strikingly large and
growing disparity in return to invested capital across major corporations
(Furman and Orszag 2015). As shown in Figure 1-10, the returns earned by
firms at the 90 th percentile are now more than six times larger than those of
the median firm, up from less than three times larger in 1990.
Occupational Licensing
There is also evidence of increased rent-seeking in the requirement of
a government-issued license to be employed in certain professions (“occupational
licensing”). As documented in Kleiner and Krueger (2013), the share
of the U.S. workforce covered by state licensing laws grew five-fold in the
42 | Chapter 1