Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/234040
Authors: 
Mertens, Matthias
Year of Publication: 
2021
Series/Report no.: 
IWH Discussion Papers No. 13/2020
Abstract: 
I study how labour market power affects firm wage differences using German manufacturing sector firm-level data (1995-2016). In past decades, labour market power increasingly moderated rising between-firm wage inequality. This is because high-paying firms possess high and increasing labour market power and pay wages below competitive levels, whereas low-wage firms pay competitive wages. Over time, large, high-wage, high-productivity firms generate increasingly large labour market rents while selling on competitive product markets. This provides novel insights on why such "superstar firms" are profitable and successful. Using micro-aggregated data covering most economic sectors, I validate my results for ten other European countries.
Subjects: 
inequality
labour market power
monopsony
rent-sharing
superstar firms
JEL: 
J31
J42
L10
Document Type: 
Working Paper

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