Labour market power and between-firm wage (in)equality

Arbeitspapier

I study how labour market power affects firm wage differences using German manufacturing sector firm-level data (1995-2016). In past decades, labour market power increasingly moderated rising between-firm wage inequality. This is because high-paying firms possess high and increasing labour market power and pay wages below competitive levels, whereas low-wage firms pay competitive wages. Over time, large, high-wage, high-productivity firms generate increasingly large labour market rents while selling on competitive product markets. This provides novel insights on why such "superstar firms" are profitable and successful. Using micro-aggregated data covering most economic sectors, I validate my results for ten other European countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH-CompNet Discussion Papers ; No. 1/2020

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Monopsony; Segmented Labor Markets ; Market Structure, Firm Strategy, and Market Performance: General
• Subject: inequality ; labour market power ; monopsony ; rent-sharing ; superstar firms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mertens, Matthias
• Event: Veröffentlichung
• (who): Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
• (where): Halle (Saale)
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/234041
• Last update: 10.03.2025, 11:45 AM CET