Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284210 
Year of Publication: 
2022
Series/Report no.: 
IFS Working Papers No. 22/40
Publisher: 
Institute for Fiscal Studies (IFS), London
Abstract: 
We propose a theory of how market power affects wage inequality. We ask how goods and labor market power jointly affect the level of wages, the Skill Premium, and wage inequality. We then use detailed microdata from the US Census 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 wage level, contributes 7% to the rise in the Skill Premium and accounts for half of the increase in between-establishment wage variance.
Subjects: 
Market Power
Wage Inequality
Skill Premium
Technological Change
Market Structure
Endogenous Markups
Endogenous Markdowns
JEL: 
C6
D3
D4
D5
L1
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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