Abstract
We propose a theory of how market power affects wage inequality. We ask how goods and labor market power jointly determine the level of wages, the skill premium, and wage inequality. We then use detailed microdata from the U.S. Census Bureau between 1997 and 2016 to estimate the parameters of labor supply, technology, and the market structure. We find that a less competitive market structure lowers the average wage of high-skilled workers by 11.3%, and of low-skilled workers by 12.2%, contributes 8.1% to the rise in the skill premium, and accounts for 54.8% of the increase in between-establishment wage variance.
| Original language | English |
|---|---|
| Pages (from-to) | 603-636 |
| Number of pages | 34 |
| Journal | Econometrica |
| Volume | 92 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - May 2024 |
| Externally published | Yes |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
-
SDG 1 No Poverty -
SDG 4 Quality Education -
SDG 8 Decent Work and Economic Growth -
SDG 10 Reduced Inequalities
Keywords
- Market power
- Endogenous markdowns
- Endogenous markups
- Market structure
- Skill premium
- Technological change
- Wage inequality
Fingerprint
Dive into the research topics of 'Walras-Bowley lecture: Market power and wage inequality'. Together they form a unique fingerprint.Cite this
- APA
- Author
- BIBTEX
- Harvard
- Standard
- RIS
- Vancouver