Market Power and Wage Inequality

Category: Öffentlich, Macro Seminar
When: 25 Mai 2021
, 14:15
 - 15:30
Where: Campus Westend – PEG-Gebäude Theodor-W.-Adorno-Platz 6 60323 Frankfurt am Main
Speaker: Prof. Jan Eeckhout


We investigate how market power affects wage inequality. Market power is driven by the market structure of the goods market as well as in the distribution of firm-specific technology. We ask how these contribute to the rise in the Skill Premium, the premium of the average college wage relative over the average non-college wage. We estimate the firm-specific technology as well as the market structure and determine how market power quantitatively affects wage inequality. We also find that there is a substantial welfare cost from excess inequality due to market power.