Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223999
Authors: 
Cortes, Matias
Tschopp, Jeanne
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers 13557
Abstract: 
Wage inequality has risen in many countries over recent decades. At the same time, production has become increasingly concentrated in a small number of firms. In this paper, we show that these two phenomena are linked. Theoretically, we show that shocks that increase concentration will also lead to an increase in wage dispersion between firms. Empirically, we use industry-level data from 14 European countries over the period 1999-2016 and show robust evidence of a positive and statis-tically significant correlation between concentration and between-firm wage inequality, driven by increases in market shares and wages in high productivity firms.
Subjects: 
wage inequality
market power
heterogeneous firms
Europe
JEL: 
J31
L11
E24
Document Type: 
Working Paper

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