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http://hdl.handle.net/10419/21332
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| Title: | | Product Market Competition, Returns to Skill and Wage Inequality  |
| Authors: | | Guadalupe, Maria |
| Issue Date: | | 2005 |
| Series/Report no.: | | IZA Discussion paper series 1556 |
| Abstract: | | This paper shows that increasing product market competition can have a direct impact on the employment relationship and on wage inequality. I develop a simple model in which an increase in product market competition increases returns to skill through the effect of competition on the sensitivity of profits to cost reductions. I then show empirically that relative wages increase with competition using a large panel of United Kingdom workers with complete work histories. I identify the impact of competition on returns to skill in the panel, using two exogenous measures of competition provided by two quasi-natural experiments. Quantile regressions indicate that increased competition also raised returns to unobserved ability. |
| Subjects: | | wage structure returns to skill product market competition |
| JEL: | | D21 L22 J33 J31 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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| dp1556.pdf | | 387.17 kB | Adobe PDF |
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