Workers are earning a smaller and smaller share of the economy's income. Their cut — referred to by economists as 'the labor share' — has been falling for decades and is now at its lowest level on record — about 53 percent of income, down from about 65 percent after World War II.

Many policymakers blame industry consolidation and corporate greed for keeping a lid on workers' compensation. There are now only three large wireless companies and four major airlines; Google dominates search. Corporate profits as a share of G.D.P. just reached a record high.

The impulse to rein in corporate giants isn't limited to the United States. Regulators in Europe, Japan and Britain are also supercharging their competition policy and stepping up enforcement. That may be the wrong solution, because it's not rising market power, but new technology — A.I. being the latest example — that is probably the most important force reducing the labor share.

Breaking up big companies won't help restore labor's share and may not help workers at all. Designing policies for a change this significant requires understanding the real cause. Since the decline was generally largest where the price of computing and communications equipment fell most, we concluded that replacing workers with machines in production — substituting capital for labor — was bringing the labor share down.