This is Figure 3 of the paper, showing an increase in intangible capital following a trademark acquisition by a firm

The Labor Demand Implications of Brand Capital: Insights from Trademark Transactions in Italy

June 11, 2025

Brand capital is an intangible asset that differentiates a firm’s products from competitors and has grown in aggregate importance over recent decades. This paper studies how brand capital shapes labor demand, with a focus on heterogeneity between production workers and workers that favor market expansion. We leverage newly linked Italian administrative data that combines the trademark registry with the universe of firms’ financial statements and employer-employee social security records. This dataset allows us to observe firm-to-firm trademark transactions and use these events to identify the effects of brand-capital investment. We develop a model of production and market access with three inputs: production labor, expansionary labor, and brand capital. In the model, firms can invest in brand capital by purchasing existing trademarks. This framework delivers testable predictions and informs our empirical strategy. Using a matched difference-in-differences design, we find that acquiring a trademark increases firms’ intangible assets, boosts sales and value added, expands employment and the wage bill while keeping wages unchanged, and reduces the labor share. Extending the analysis to both trademark buyers and sellers, we show that the trademark market improves allocative efficiency: buyers' gains exceed sellers' losses, leading to net positive effects on output. These gains come with a decline in the combined labor share. Trademark acquisitions lead to employment gains that are concentrated among \emph{expansionary} workers---those in marketing and sales---rather than \emph{production} workers. This suggests that brand capital is not skill-neutral and complements expansionary labor. As a result, within-firm inequality rises.