A comment on "Walras-Bowley lecture: market power and wage inequality" by Shubhdeep Deb, Jan Eeckhout, Aseem Patel, and Lawrence Warren

Van Reenen, John ORCID: 0000-0001-9153-2907 (2024) A comment on "Walras-Bowley lecture: market power and wage inequality" by Shubhdeep Deb, Jan Eeckhout, Aseem Patel, and Lawrence Warren. Econometrica, 92 (3). 643–646. ISSN 0012-9682

Text (A Comment on: “Walras–Bowley Lecture: Market Power and Wage Inequality” by Shubhdeep Deb, Jan Eeckhout, Aseem Patel, and Lawrence Warren) - Published Version Available under License Creative Commons Attribution. Download (66kB)

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Abstract

A burgeoning literature in labor economics is focused on modeling employer labor market power, generally finding nontrivial estimates of monopsony power. A smaller literature also simultaneously incorporates product market power. Deb, Eeckhout, Patel, and Warren (2024) is an example of applying an oligopoly‐oligopsony model to the U.S. labor market, arguing for important effects on wage levels and inequality from rising market power. I support combining IO and labor as a fruitful way of studying wages and business dynamism, but argue for looking more broadly at (i) differential degrees of employer power in labor and product markets; (ii) investigating the dynamic sources of markups (e.g., through innovation), and (iii) considering wage bargaining models, not just wage posting models, which have some starkly different implications for wage setting.

Item Type:	Article
Official URL:	https://onlinelibrary.wiley.com/journal/14680262
Additional Information:	© 2024 The Author
Divisions:	Economics
Date Deposited:	22 Feb 2024 10:45
Last Modified:	27 Nov 2024 21:54
URI:	http://eprints.lse.ac.uk/id/eprint/122084

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