Rising Concentration and Wage Inequality

Guido Matias Cortes and Jeanne Tschopp

No 13557, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: heterogeneous firms; market power; wage inequality; Europe (search for similar items in EconPapers)
JEL-codes: E24 J31 L11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2020-07
New Economics Papers: this item is included in nep-bec, nep-com, nep-eec, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Scandinavian Journal of Economics, 2024, 126 (2), 320-354

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Related works:
Journal Article: Rising concentration and wage inequality (2024)
Working Paper: Rising Concentration and Wage Inequality (2020)
Working Paper: Rising Concentration and Wage Inequality (2020)
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