Market concentration and its impact on labour share and wage inequality: a historical perspective on Chilean manufacturing (1995–2007)

Fernando Sossdorf

Revista CEPAL, 2025

Abstract: The rise in market concentration in advanced economies has been linked to declining labour share and rising wage inequality, driven by the emergence of ‘‘superstar’’ firms operating with low labour shares. This paper examines the effects of market concentration on labour share and wage inequality across 113 sectors of Chilean manufacturing between 1995 and 2007, a period of significant economic transformation. Results show that greater market concentration is associated with declining labour share and rising wage inequality, benefiting highly skilled workers in particular. However, the leading firms in these industries diverge from the ‘‘superstar’’ model, relying on higher markups rather than productivity or innovation gains. These findings suggest that concentration polarizes labour markets, undermines productivity growth and amplifies economic inequality, with important policy implications.

Date: 2025-08
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Persistent link: https://EconPapers.repec.org/RePEc:ecr:col070:85916

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