Mokre Patrick (2021): The Quantile Impacts of Real Competition on Industrial Wage Inequality in the United States, 1998-2018. Accepted the Ninth ECINEQ Meeting, July 8-10 2021, ECINEQ The Society for the Study of Economic Inequality.
Competition between firms has a substantial impact on wage inequality between workers. The classical political economics literature proposes that turbulent dynamics of real competition within and between industries provide the framework for wage bargaining between workers and firms. Practial limits to wage growth are given turbulently equalizing (incremental profit rates and within-industry cost differentials) and persistently different factors (capital intensity and share of labor cost in total cost). The former provide the link between competition and wage growth, while the latter are responsible for persistent industrial wage premiums. We combine employee level data from the CPS and industry level data from BEA industry accounts from 1998-2018 and find that these impacts are substantial and of unambiguous signs but differential magnitude between income quantiles in those industries where both incremental profit rates and wage growth participate in turbulent equalization.