布魯金斯學(xué)會(huì)-包容性的未來(lái)？技術(shù)、新動(dòng)力和政策挑戰(zhàn)（英）-2022.5

MAY2022

ANINCLUSIVE

FUTURE?

TECHNOLOGY,NEW

DYNAMICS,AND

POLICYCHALLENGES

DavidAutor

Editedby

ZiaQureshi

KaushikBasu

ZiaQureshi

DaniRodrik

ThisreportispartoftheBrookingsInstitution's

GlobalForumonDemocracyandTechnology

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

Acknowledgments

Theeditorwouldliketothanktheauthors—DavidAutor,KaushikBasu,andDaniRodrik—fortheircontributions.JaninaCurtisBr?kerprovidedexcellentresearchsupport.Thanksarealsoduetocolleagueswhoreadandreviewedthedraftmaterial.EstherLeeRosenablyprovidededitorialandcommunicationssupport—includingassisting(withDavidBatcheck)inorganizingapublic

seminar

onthisworkwiththeauthorsonDecember8,2021.

ThisworkispartoftheBrookingsGlobalForumonDemocracyandTechnologythatseekstopromoteideas,policies,andpracticesthatwouldharnessnewtechnologiesinwaysthatsupportbroad-basedimprovementsineconomicprosperityandstrengthendemocraticsocieties.ChrisMeserole,JessicaBrandt,andSarahReedfromtheGlobalForumprojectprovidedvaluablesupportinthiswork.

TheBrookingsInstitutionisanonprofitorganizationdevotedtoindependentresearchandpolicysolutions.Itsmissionistoconducthigh-quality,independentresearchand,basedonthatresearch,toprovideinnovative,practicalrecommendationsforpolicymakersandthepublic.TheconclusionsandrecommendationsofanyBrookingspublicationaresolelythoseofitsauthor(s),anddonotreflecttheviewsorpoliciesoftheInstitution,itsmanagement,itsotherscholars,oritsfunders.Brookingsrecognizesthatthevalueitprovidesisinitscommitmenttoquality,independence,andimpact.Activitiessupportedbyitsdonorsreflectthiscommitment.

AboutGlobalEconomyandDevelopment

Foundedin2006,theGlobalEconomyandDevelopmentprogramattheBrookingsInstitutionaimstoplayitsparttoensurethatthefutureoftheglobaleconomyisoneofinclusivegrowthandsharedprosperity.Withaninterdisciplinaryteamofexperts,Globalprovidesthought-leadership,cutting-edgeresearch,andinnovativepolicysolutionstoachieveamoreequitableglobaleconomicsystemforsustainableprosperity,drawingonthecorestrengthsofBrookings—authoritativeness,independence,depthofpracticalexpertise,andunparalleledconveningpower.Formore,visit

/global

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

Contents

1

Overview:Combatinginequalityandbuildinginclusiveprosperityinthedigitalera

ZiaQureshi

1

2

Thelabormarketimpactsoftechnologicalchange:Fromunbridledenthusiasmtoqualifiedoptimismtovastuncertainty

DavidAutor

18

3

Digitaltechnologyandglobalization:Thepromiseandpitfalls

KaushikBasu

48

4Prospectsforglobaleconomicconvergenceundernewtechnologies

DaniRodrik65

Contributors

83

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

1

1Overview

Combatinginequalityandbuildinginclusiveprosperityinthedigitalera

ZiaQureshi

1

Introduction

Technologicalchange,ledbydigitaltechnologies,isadefiningfeatureofourtime.Wearelivinginwhathasbeenaptlytermedthedigitalera.Thenewtechnologiesarereshapingeconomies—andsocieties.Wemaybeonthecuspofasignificantdeepeningandaccelerationoftheongoingdigitaltransformationofoureconomiesandsocietiesasartificialintelligence(AI)spawnsanewwaveofinnovations.TheCOVID-19pandemichasgivenaddedimpetustoautomation.Thefutureisarrivingatafasterpacethanexpected.

Advancesindigitaltechnologiesholdgreatpromise.Theycreatenewavenuesandopportunitiestoboosteconomicprosperityandraisehumanwelfare.Buttheyalsoposenewchallengesandrisks.Asthenewtechnologiestransformmarketsandnearlyeveryaspectofbusinessandwork,theyhavehighlighted,andcandeepen,economicandsocialfaultlinesacrossadvancedanddevelopingeconomies.

Onemajorfaultlineiseconomicinequality.Technologicalchangecanshiftgrowthanddistributionaldynamicsinwaysthatpushinequalityhigher.Indeed,inequalityhasbeenrisinginmanycountriesovertheperiodoftheboomindigitaltechnologies.Acrosseconomies,thereisunevenparticipationinthenewopportunitiescreatedbydigitaltransformation.Manyarebeingleftbehind,acrossindustries,acrosstheworkforce,andacrossdifferentsegmentsofsociety.

Risinginequalityandrelateddisparitiesandanxietieshavebeenstokingsocialdiscontentandareamajordriveroftheincreasedpopulardisaffectionandpoliticalpolarizationthataresoevidenttoday.Anincreasinglyunequalsocietycanweakentrustinpublicinstitutionsandunderminedemocratic

1IwouldliketothankJaninaCurtisBr?kerforresearchsupport.

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

2

governance.Mountingglobaldisparitiescanimperilgeopoliticalstability.Risinginequalityhasemergedasanimportanttopicofpoliticaldebateandamajorpublicpolicyconcern.

Motivatedbythesedevelopments,acurrentinitiativeatBrookings—GlobalForumonDemocracyandTechnology—seekstopromoteideas,policies,andpracticesthatwouldharnessthenewtechnologiesinwaysthatsupportbroad-basedimprovementsineconomicprosperityandstrengthendemocraticsocieties.

2

Animportantresearchworkstreamunderthisinitiativefocusesontechnology’simplicationsforinequalityandonthepolicyagendatopromotemoreinclusivegrowthanddevelopmentoutcomesfromcurrentandprospectiveadvancesintechnology.

Thereareimportantquestionsthatmustbeaddressed.Inwhatwaysistoday’stechnologicaltransformationcontributingtohigherinequalitywithineconomies?Shouldworkersfearthenewautomation?Whataretheimplicationsofthenewtechnologiesforglobalinequalityandeconomicconvergencebetweeneconomies?Whatnewchallengesariseforpublicpolicytomanagetechnologicalchangetobuildinclusiveprosperity?Whatnewthinkingandadaptationsareneededtorealigninstitutionsandpolicieswiththedigitaleconomy,atnationalandgloballevels—andtoshapetechnologicalchangeitself?Thisreport,partofongoingresearchontechnologyandinequalityundertheGlobalForumproject,addressesthesequestions.

Risinginequalityinthedigitalera

Thelastthreetofourdecadeshavebeenaperiodofrapidtechnologicaltransformation,ledbyanexpandingarrayofdigitalinnovations.Rangingfromincreasinglysophisticatedcomputersystems,software,andmobiletelephonytodigitalplatformsandrobotics,theseinnovationshavebeenreshapingmarketsandtheworldsofbusinessandwork.NewadvancesinAI,machinelearning,cyber-physicalsystems,andtheInternetofThingsaredrivingdigitaltransformationfurther.Thislatestwaveofinnovationscantakethedigitalrevolutiontoawholenewlevel.

3

AndtheautomationanddigitalizationofeconomicactivityareintensifyinginthewakeoftheCOVID-19pandemic.

4

Indeed,thepandemicmayberememberedastheGreatDigitalAccelerator.

Overthisperiodofdigitaltransformation,economicinequalityhasbeenrising.Incomeinequalityhasriseninmostcountriessincethe1980s.Practicallyallmajoradvancedeconomieshaveexperiencedariseinincomeinequality,andtheincreasehasbeenparticularlylargeintheUnitedStates,thecountryattheleadingedgeofthedigitalrevolution.Thosewithmiddle-classincomeshavebeensqueezed.Thetypicalworkerhasseenlargelystagnantrealwagesoverlongperiods—andincreasedanxietyaboutjoblossfromautomation.Intergenerationaleconomicmobilityhasdeclined.

5

Incomedistributiontrendsaremoremixedinemergingeconomiesbutmanyofthem—andmostofthemajoremergingeconomies—alsohaveexperiencedrisinginequality.Figure1showsthetrendintheGinicoefficient,abroadmeasureofinequality,inthemajoradvancedandemergingeconomiesthataremembersoftheG-20.

6

2/global-forum-on-democracy-and-technology/.

3WestandAllen(2020).

4SeeKorinekandStiglitz(2021),ChernoffandWarman(2020),andMcKinseyGlobalInstitute(2021).

5FortheUnitedStates,seeChettyetal.(2017).

6ThefigurecoversallindividualG-20economiesexceptSaudiArabia,forwhichincomedistributiondataarelimited.Thefigureshowsthetrendininequalitybasedonmarketincome.Trendsininequalitybasedondisposableincome(takingintoaccounttaxesandtransfers)arebroadlysimilar,exceptthatthelevelofdisposableincomeinequalityislowerthanthatofmarketincomeinequality,especiallyinadvancedeconomies.Fortheseeconomies,taxesandtransferstypicallyreducemarketincomeinequalityonaveragebyclosetoone-third.

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

3

EmergingEconomies

0.8

0.7

0.6

0.5

0.4

0.3

198019851990199520002005201020152020

ArgentinaBrazilChina

IndiaIndonesiaMexico

RussiaSouthAfricaTurkey

Australia

Canada

AdvancedEconomies

50%

40%

30%

20%

198019851990199520002005201020152020

France

Germany

Italy

Japan

Korea

UK

USA

Figure1.Risingincomeinequality:Ginicoefficient,1980–2020

AdvancedEconomies

0.6

0.5

0.4

0.3

198019851990199520002005201020152020

AustraliaCanadaFrance

GermanyItalyJapan

KoreaUKUSA

Source:WorldInequalityDatabase.

Note:Pre-taxnationalincome.Somedatapointsareextrapolated.

Therehasbeenaparticularlylargeincreaseinincomeconcentrationatthetopendofthedistribution.Figure2showsthetrendintheshareoftherichest10percentofthepopulationinnationalincomefortheG-20advancedandemergingeconomies.

Figure2.Risingincomeconcentrationatthetop:richesttenpercentshare,1980–2020

EmergingEconomies

70%

60%

50%

40%

30%

20%

198019851990199520002005201020152020

ArgentinaBrazilChina

IndiaIndonesiaMexico

RussiaSouthAfricaTurkey

Source:WorldInequalityDatabase.

Note:Pre-taxnationalincome.Somedatapointsareextrapolated.

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

4

Notonlyhasinequalitybeenrising,theexpectedproductivitydividendfromdigitaltechnologieshasnotfullymaterialized.Thepotentialofthenewtechnologiestodeliverhigherproductivityandeconomicgrowthissizable(evendramatic,asBasunotesinChapter3).But,paradoxically,productivitygrowthhasslowedratherthanacceleratedinmanyeconomiesasdigitaltechnologieshaveboomed.

7

TheproductivityslowdownextendsacrossOECDeconomies—andmanyemergingeconomiesaswell.Economicgrowth,consequently,hastrendedlower.ThetwintrendsofrisinginequalityandslowerproductivitygrowtharevividlyillustratedbytheU.S.economy(Figure3).Sincetheearly1980s,theshareofthetop10percentinincomeintheUnitedStateshasrisenfrom34percentto46percent(theincomeshareofthetoponepercenthasroughlydoubledfrom10percentto19percent).

8

Asforproductivitygrowth,itslowedconsiderablyaftertheearly2000s.Overthelastdecade-plus,ithasaveragedlessthanhalfthegrowthrateofthedecadepriortotheslowdown.

9

Figure3.Twintrendsofrisinginequalityandslowingproductivitygrowth:UnitedStates,

1985–2019

%annualchange%share

4.050

3.045

2.040

1.035

0.030

19851990199520002005201020152020

LaborproductivityTop10%incomeshare

Source:QureshiandWoo(2022)

Whilewithin-countryinequalityhasriseninmostcountriesinrecentdecades,inequalitybetweencountrieshasbeenfalling.

10

Faster-growingemergingeconomieshavebeennarrowingtheincomegapwithadvancedeconomies.Buttechnologicalchangeposesnewchallengesforthisglobaleconomicconvergence.Manufacturing-ledgrowthinemergingeconomieshasbeendrivenbytheircomparativeadvantageinlabor-intensivemanufacturingbasedonlargepopulationsoflow-skilled,low-wageworkers.Thissourceofcomparativeadvantageincreasinglywillerodeasautomationoflow-skilledworkexpands,disruptingtraditionalpathwaystodevelopment.

11

7Currentstatisticalmethodsmaynotfullycapturethenewvaluecreatedinthedigitalspace.However,researchshowsthat,evenallowingforsuchmeasurementissues,theproductivityslowdownisreal,notillusory.SeeDervi?andQureshi(2016)forasummarydiscussion.SeealsoBrynjolfssonetal.(2017).

8Wealthisstillmoreconcentrated,withtheshareofthetop1percentrisingfrom23percentto36percentsincetheearly1980s.

9TheproductivityseriesinFigure3showsfive-yearmovingaveragestosmoothyear-to-yearfluctuations.

10Between-countryincomeinequalitycapturesper-capitaincomedifferencesbetweencountries.

11CoulibalyandFoda(2020).

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

5

Globalinequality—thesumofwithin-countryandbetween-countryinequality—hasdeclinedsomewhatsincearound2000,withfallingbetween-countryinequalitymorethanoffsettingrisingwithin-countryinequality.Butifglobaleconomicconvergenceslows,andwithin-countryinequalitycontinuestorise,therecentdeclineinglobalinequalitycouldpeteroutorevenreverse.Within-countryinequalityaccountedfor68percentofglobalinequalityin2020,upfrom43percentin1980.

12

Lookingahead,howwithin-countryinequalityevolveswillmatterevenmoreforglobalinequality.

Manyfactorsaffectincomedistribution—technology,globalization,andpoliciesandinstitutions.Researchhasincreasinglyfocusedontechnologicalchangeasakeydriveroftheriseininequalityobservedinrecentdecades.

13

Thebenefitsofcurrenttechnologicaltransformationhavebeensharedhighlyunevenly.However,technologyperseisnottheproblem.Onthecontrary,thenewtechnologiesholdimmensepotentialtoraiseproductivity,createnewandbetterjobstoreplaceoldones,andunderpinbroad-basedgrowthinincomes.Thechallengeistobetterharnessthispotential.

Technologicalchangeisinherentlydisruptive,evenmoresowhenitisasfar-reachinginitsimplicationsastheongoingdigitaltransformation.Itinevitablycreateswinnersandlosers.Policieshaveacrucialroletoplaytoimprovetheenablingenvironmentforfirmsandworkers—tobroadenaccesstothenewopportunitiesthatcomefromtechnologicalchangeandtoenhancecapabilitiestoadjusttothenewchallenges.Unfortunately,policiesandinstitutionshavebeenslowtorisetothechallengesoftechnologicalchange.

Theoutcomesofrisinginequalityandslowingproductivitygrowthareinterconnected,andcloselylinkedtothewaynewtechnologieshaveinteractedwiththeprevailingpolicyandinstitutionalenvironment.

14

Astechnologyreshapesmarketsandaltersgrowthanddistributionaldynamics,policiesmustensurethatmarketsremaininclusiveandsupportwideaccesstothenewopportunitiesforfirmsandworkers.Thedigitaleconomymustbebroadenedtodisseminatenewtechnologiesandproductiveopportunitiestosmallerfirmsandwidersegmentsofthelaborforce.Thiswillbothhelpavertrisinginequalityandcapturetheproductivitydividendfromdigitaltransformationacrosswiderswathesoftheeconomy.Combatinginequalityastechnologydriveschange,therefore,isnotonlyadistributionalissue;itisalsoaboutharnessingthenewtechnologiestopromotemoreinclusive—andstronger—economicgrowth.

Changingmarketdynamics

Howpolicyshouldrespondmustbeinformedbyhowtechnologyischangingmarketdynamicsandaffectingbusinessandwork.Thetransformationsoccurringareprofound,acrossproductandlabormarkets.

Digitaltechnologiesarealteringbusinessmodelsandreshapingproductmarketstructures.Howtechnologydiffuseswithintheeconomyinfluencesbothproductivitygrowthandincomedistribution.Sofar,thebenefitsofdigitalinnovationshavebeencapturedmostlybyarelativelysmallnumberoflargefirms.EvidenceforOECDeconomiesshowsthattheslowdowninproductivity,atitsroot,reflectsagrowinginequalityinproductivityperformancebetweenfirms.Forfirmsatthetechnologicalfrontier,

12Chanceletal.(2022).

13See,forexample,Qureshi(2020a)andBourguignon(2022).

14Onthenexusconnectingtechnology,policies,andtheproductivityanddistributionaloutcomes,seeBrookingsInstitutionandChumirFoundation(2019)andFurmanandOrszag(2018).

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

6

productivitygrowthhasremainedrelativelystrong.Butithasslowedconsiderablyinthevastmajorityofotherfirms,depressingaggregateproductivitygrowth.Overafifteen-yearperiodsince2000,laborproductivityamongfrontierfirmsinOECDeconomiesrosebyaround45percent;amongnon-frontierfirms,theincreasewaswellbelow10percent.

15

Eventheeconomyatthedigitalfrontier—theUnitedStates—maybereachingonlyaboutafifthofitsdigitalpotential.

16

Oneimportantfactorbehindthistrendisweakeningcompetition.Barrierstocompetitionandrelatedmarketfrictionshavepreventedabroaderdiffusionofnewtechnologies.Inindustrieswithdiminishedcompetitiveintensity,technologicalinnovationanddiffusionhavebeenweaker,inter-firmproductivitydivergencehasbeenwider,andaggregateproductivitygrowthhasbeenslower.

17

InthecaseoftheUnitedStates,forexample,theerosionofcompetitionisreflectedinavarietyofindicators:riseinmarketconcentrationinindustries,highermarkupsshowingincreasedmarketpowerofdominantfirms,thesefirms’supernormalprofits(rents)thataccountforarisingshareoftotalcorporateprofits,lowchurningamonghigh-returnfirms,anddeclineinnewfirmformationandbusinessdynamism.Between1985and2015,rents(profitsinexcessofthoseundercompetitivemarketconditions)areestimatedtohaverisenfromanegligibleshareofnationalincometoaboutone-fifth.

18

Whyismarketconcentrationrising?AsBasunotesinChapter3,onekeyfactorisdigitaltechnologiesthatproduceawinner-takes-allformofcompetition.Theyofferfirst-moveradvantages,strongeconomiesofscaleandnetworkeffects,andtheleverageofbigdatathatencouragetheriseof“superstarfirms.”

19

Theriseof“theintangibleeconomy”—whereassetssuchasdata,software,andotherintellectualpropertymattermoreforeconomicsuccess—hasbeenassociatedwithastrongertendencytowardtheemergenceofdominantfirms.

20

Thewinner-takes-alldynamicsaremostmarkedinthehigh-techsectors,asreflectedintheriseoftechgiantssuchasApple,Facebook(nowMeta),andGoogle.Buttheyareincreasinglyevidentinothersectorsasdigitalizationpenetratestheeconomy,suchasintheriseofAmazonintrade.

Failuresincompetitionpolicyhavereinforcedthesetechnology-drivenforcesproducinghighermarketconcentration.AsBasupointsoutinChapter3,competitionpolicyhasfailedtoadapttotheshiftinmarketstructuresandthenewchallengestokeepmarketscompetitiveinthedigitaleconomy.

21

Antitrustenforcementhasbeenweakinthefaceofrisingmonopolypowerandtakeoveractivity.Also,flawsinpatentsystemshaveactedasbarrierstoneworfollow-oninnovationandwiderdiffusionofnewtechnologies.

22

Thesesystems,typicallydesignedmanydecadesago,havebeenslowtoadapttotheknowledgedynamicsofthedigitalera.

Asinproductmarkets,technologyhasbeenunleashingmajorchangesinlabormarketsbutpolicieshavebeenslowtorespondtothistransformation.Whileproductmarketshaveseenrisinginequalitybetweenfirms,labormarketshaveseenrisinginequalitybetweenworkers.Automationanddigitaladvancesare

15SeeAndrewsetal.(2016)andCalvinoandCriscuolo(2022).Frontierfirmsinthisestimatearedefinedasthetop5percentoffirmswiththehighestlaborproductivitywithineachtwo-digitindustry.Non-frontierfirmscoverallotherfirms.

16McKinseyGlobalInstitute(2015).

17Andrewsetal.(2016).

18Eggertssonetal.(2021).SeealsoAkcigitetal.(2021),DeLoeckeretal.(2020),Qureshi(2019),Philippon(2019),andTepper(2019).

19Autor,Dorn,etal.(2020).

20HaskelandWestlake(2017)andCrouzetandEberly(2019).

21SeealsoKhan(2017),whicharguesthatthecurrentU.S.antitrustlegalframeworkisill-equippedtoaddressthecompetitionpolicychallengesofthedigitaleconomy,suchasthoseposedbybusinessmodelsbasedononlineplatformslikethatofAmazon.

22AkcigitandAtes(2019).SeealsoQureshi(2018).

ANINCLUSIVEFUTURE?TECHNOLOGY,NEWDYNAMICS,ANDPOLICYCHALLENGES

7

changingthenatureofworkandshiftinglabordemandawayfromroutinelow-tomiddle-levelskillstonew,higher-levelskills.Onthesupplyside,however,adjustmenthasbeenslowinequippingworkerswithskillsthatcomplementthenewtechnologiesandsupportingtheirtransitiontonewtasksandjobs.Educationandtraininghavebeenlosingtheracewithtechnology.InChapter2,Autorexaminesindetailtheshiftingdynamicsinlabormarketsandimplicationsforjobsandwages.

Thelaginadaptingthesupplyofskillstochangingdemandhashamperedthebroaderadoptionofinnovationsthatrequirenewskills,limitingproductivitygains.Mismatchbetweentheskillsavailableandtheskillsneededhasbeengrowing.Workerswithskillscomplementarytothenewtechnologieshaveincreasinglyclusteredindominantfirmsatthetechnologicalfrontier.Theshiftsinlabordemandhaveincreasedskillpremiaandwagedifferentials,contributingtohigherlaborincomeinequalityanddiminishedjobprospectsforless-skilledworkers.Theskillpremiumhasrisensincethe1980sandhasmorerecentlyincreasedparticularlysharplyatthehigherendofeducationalattainment—graduateandprofessionaleducation.Skill-biasedtechnologicalchangehascontributedtoa“convexification”ofreturnstoeducationandtraining.

23

Jobmarketshaveseenincreasingpolarization,withdemandshiftingawayinparticularfromroutine,middle-levelskillsthataremoreeasilyautomatable.IntheUnitedStates,forexample,asmuchas50-70percentoftheincreaseinearningsinequalitybetween1980and2016maybeduetotheautomationoftasksformerlydonebyhumanworkers.

24

Partoftheworkforcedisplacedfrommiddle-skilljobsishavingtomovetolower-skill,lower-productivity,lower-wagejobs,givingrisetoan“inverseLewiseconomy.”

25

HowwillAI,thenextphaseofthedigitalrevolution,affecttherelativedemandforskillsandearningsinequality?InChapter2,Autordiscussesthepotentialeffects,whileunderscoringtheuncertaintyassociatedwithhowthescopeofAIcapabilitiesmayevolve.AsAIadvances,displacementriskscouldaffectsomehigher-levelskillsaswell,incontrasttopreviouswavesofautomation.However,thedisplacementriskathigher-levelskillsmayapplymoreatthetasklevelthanatthelevelofentirejobsoroccupationsashasbeenthecasewithlow-tomiddle-levelskills.

26

Higher-skilledworkerstypicallyalsohavegreaterabilitytoadjustbygainingnewskillsandnewemploymentthanless-skilledworkers.

Alongwithrisingwageinequality,therehasbeenagrowingdecouplingofwagesfromproductivity.IntheUnitedStates,forexample,wagegrowthhaslaggedwellbehindproductivitygrowthinrecentdecades.

27

Industriesexperiencinghighermarketconcentrationandearninghighereconomicrentshaveseenagreaterdecouplingofwagesfromfirmprofitabilityandlargerdropsinlabor’sshareofincome.Dominantfirmsarenotonlyacquiringmoremonopolypowerinproductmarketstoincreasemarkupsandextracthigherrentsbutalsomonopsonypowertodictatewagesinthelabormarket.

28

Whileemployermarketpowerhasincreased,workerbargainingpowerhasweakenedwithadeclineinunionizationanderosionofminimumwagelaws.

Thedecouplingofwagesfr