This is Figure 4 of the paper, showing an increase in intangible capital following a trademark acquisition by a firm

The Labor Demand Implications of Brand Capital: Evidence from Trademark Transactions

June 11, 2025

Brand capital-an intangible asset that differentiates a firm’s products-has grown in importance in recent decades. Trademarks protect brand capital and are actively traded in firm-to-firm markets. This paper studies how brand capital reshapes labor demand within firms, focusing on the heterogeneity between production and marketing workers. We link Italian administrative data on trademark ownership, firms’ financial statements, and employer–employee records, and use trademark transactions to identify the firm-level effects of brand-capital investments. We develop a model in which firms combine production labor, expansionary labor, and brand capital, and can invest in the latter by purchasing existing trademarks. The model provides testable predictions that guide our empirical analysis. Using a matched difference-in-differences design, we show that acquiring a trademark increases firms’ intangible assets, sales, and employment, but leaves average wages unchanged, reducing the labor share. Employment growth is concentrated among marketing and sales workers, indicating that brand capital is not skill-neutral and induces internal reorganization. Considering both trademark buyers and sellers, we find that the trademark market reallocates brand capital toward more productive firms, generating net output gains but a lower aggregate labor share. We conclude by discussing the model-based implications of these results for the aggregate labor share.