The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: May, 2024, Volume 92, Issue 3
https://doi.org/10.3982/ECTA21157
p. 603-636
Shubhdeep Deb, Jan Eeckhout, Aseem Patel, Lawrence Warren
We propose a theory of how market power affects wage inequality. We ask how goods and labor market power jointly determine the level of wages, the skill premium, and wage inequality. We then use detailed microdata from the U.S. Census Bureau between 1997 and 2016 to estimate the parameters of labor supply, technology, and the market structure. We find that a less competitive market structure lowers the average wage of high‐skilled workers by 11.3%, and of low‐skilled workers by 12.2%, contributes 8.1% to the rise in the skill premium, and accounts for 54.8% of the increase in between‐establishment wage variance.
Shubhdeep Deb, Jan Eeckhout, Aseem Patel, and Lawrence Warren
This supplemental appendix contains material not found within the manuscript.
Shubhdeep Deb, Jan Eeckhout, Aseem Patel, and Lawrence Warren
The replication package for this paper is available at https://doi.org/10.5281/zenodo.10636587. The authors were granted an exemption to publish their data because either access to the data is restricted or the authors do not have the right to republish them. However, the authors included in the package a simulated or synthetic dataset that allows running their codes. The Journal checked the synthetic/simulated data and the codes for their ability to generate all tables and figures in the paper and approved online appendices. However, the synthetic/simulated data are not designed to reproduce the same results. Given the highly demanding nature of the algorithms, the reproducibility checks were run on a simplified version of the code, which is also available in the replication package.
