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- Title
Reply to: Comments on "Walras–Bowley Lecture: Market Power and Wage Inequality".
- Authors
Deb, Shubhdeep; Eeckhout, Jan; Patel, Aseem; Warren, Lawrence
- Abstract
This article is a reply to comments on a lecture titled "Market Power and Wage Inequality." The authors' goals are to provide a methodological framework that incorporates both goods market power and labor market power in a general equilibrium setting, and to propose an empirical strategy for estimating key structural parameters and a joint distribution of establishment-level productivity. Their model shows that market power and wage inequality are determined simultaneously by market structure, establishment-level productivity, and substitutability parameters. The authors find that changes in market structure account for a significant portion of the rise in the skill premium and between-establishment inequality. They acknowledge the limitations of their assumptions and suggest future work to explore the impact of non-overlapping markets and other sources of market power. The authors also discuss the role of globalization and the need to carefully disentangle the sources of firms' market power. They conclude by emphasizing the importance of understanding the implications of market power for wage inequality and the potential policy implications.
- Subjects
MARKET power; INCOME inequality; WAGE increases; CAREER changes; TECHNOLOGICAL innovations; GEOGRAPHY education
- Publication
Econometrica, 2024, Vol 92, Issue 3, p647
- ISSN
0012-9682
- Publication type
Article
- DOI
10.3982/ECTA22384