Market power and income disparities: How can firms influence the gap between capital and labor earnings

Chrysovalantis Amountzias

doi:10.1111/boer.12450

Market power and income disparities: How can firms influence the gap between capital and labor earnings

Chrysovalantis Amountzias

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Abstract

This paper investigates the effects of market power on income disparities when firm‐specific parameters are considered to test how they shape the gap between capital and labor earnings through their pricing decisions. The dataset consists of 2895 UK manufacturing and services firms over 2010–2019. The results provide the following insights: (a) There is a strong positive association between market power and income disparities across the market, (b) liquidity constraints exert a positive effect on the asset‐based disparities ratio, but a negative effect on the profit‐based ratio. The robustness of the results is also checked when market‐specific characteristics are included in the process.

Original language	English
Article number	12450
Pages (from-to)	1-28
Number of pages	28
Journal	Bulletin of Economic Research
Early online date	16 May 2024
DOIs	https://doi.org/10.1111/boer.12450
Publication status	E-pub ahead of print - 16 May 2024

Keywords

income disparities
markup ratio
panel data
liquidity constraints
firms

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10.1111/boer.12450Licence: CC BY

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©2024 The Author. Bulletin of Economic Research published by Board of Trustees of the Bulletin of Economic Research and John Wiley & Sons Ltd. This is an open access article distributed under the terms of the Creative Commons Attribution License (CC BY), https://creativecommons.org/licenses/by/4.0/
Final published version, 999 KBLicence: CC BY

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abstract = "This paper investigates the effects of market power on income disparities when firm‐specific parameters are considered to test how they shape the gap between capital and labor earnings through their pricing decisions. The dataset consists of 2895 UK manufacturing and services firms over 2010–2019. The results provide the following insights: (a) There is a strong positive association between market power and income disparities across the market, (b) liquidity constraints exert a positive effect on the asset‐based disparities ratio, but a negative effect on the profit‐based ratio. The robustness of the results is also checked when market‐specific characteristics are included in the process.",

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Market power and income disparities: How can firms influence the gap between capital and labor earnings

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