Market Power and Inequality in the Labor Market
Navn på bevillingshaver
Elena Mattana
Titel
Associate Professor
Institution
Aarhus University
Beløb
DKK 4,834,693
År
2023
Bevillingstype
Semper Ardens: Accelerate
Hvad?
We study the importance of market power in the labor market to understand wage inequality: How do firms interact among each other to attract the “best” workers and/or pay lower wages? How are models of wage-setting affected by including sources of market power and/or labor market frictions? How does labor market connectivity affect wages?
Hvorfor?
It is important to understand the causes of wage dispersion to design policies that reach predefined goals in terms of inequality. A large literature focuses on some of these causes in isolation, mostly abstracting on how the interplay between sources of market power and the underlying structure of the labor market can have strong quantitative implications on wage dispersion.
Hvordan?
We use theory and empirics. We develop labor market models that introduce much-needed complexity, but are also tractable. We show how the key parameters of these models can be estimated and do so using Danish registers. We use the estimated models to quantify the role of market power in wage-setting and wage inequality. Ultimately, we use the models to analyze policies.