Walras-Bowley lecture: market power and wage inequality

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• dc.contributor.author Deb, Shubhdeep
• dc.contributor.author Eeckhout, Jan
• dc.contributor.author Patel, Aseem
• dc.contributor.author Warren, Lawrence
• dc.date.accessioned 2025-06-13T13:22:03Z
• dc.date.available 2025-06-13T13:22:03Z
• dc.date.issued 2024
• dc.date.updated 2025-06-13T13:22:02Z
• dc.description.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.
• dc.description.sponsorship Eeckhout gratefully acknowledges support from the ERC, Advanced Grant 882499 and Deb from "la Caixa" Foundation (ID 100010434) fellowship (code LCF/BQ/DR19/11740003).
• dc.format.mimetype application/pdf
• dc.identifier.citation Deb S, Eeckhout J, Patel A, Warren L. Walras-Bowley lecture: market power and wage inequality. Econometrica. 2024;92(3):603-36. DOI: 10.3982/ECTA21157
• dc.identifier.doi http://dx.doi.org/10.3982/ECTA21157
• dc.identifier.issn 0012-9682
• dc.identifier.uri http://hdl.handle.net/10230/70684
• dc.language.iso eng
• dc.publisher Econometric Society
• dc.relation.ispartof Econometrica. 2024;92(3):603-36
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/882499
• dc.rights ©2024 The Authors. Econometrica published by JohnWiley&Sons Ltd on behalf of The Econometric Society. Jan Eeckhout is the corresponding author on this paper. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/4.0/
• dc.subject.keyword Market power
• dc.subject.keyword Wage inequality
• dc.subject.keyword Skill premium
• dc.subject.keyword Technological change
• dc.subject.keyword Market structure
• dc.subject.keyword Endogenous markups
• dc.subject.keyword Endogenous markdowns
• dc.title Walras-Bowley lecture: market power and wage inequality
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/publishedVersion