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Competition policy and labor income share: Evidence from the antitrust policy in China

Author

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  • Cheng, Rui
  • Li, Jing
  • Wu, Ting

Abstract

This study examines the impact of increased market competition on labor income share. We use the enactment of China's Anti-Monopoly Law as a quasi-natural experiment. The results reveal that the Anti-Monopoly Law has a significant positive effect on the labor income share of firms with higher market power. This is because the rising market competition, effected by the Anti-Monopoly Law, inhibits market power and increases average labor wages. Our findings are relevant for firms in provinces with higher administrative monopolies, with less competition, and under industries with less competition.

Suggested Citation

  • Cheng, Rui & Li, Jing & Wu, Ting, 2024. "Competition policy and labor income share: Evidence from the antitrust policy in China," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 966-977.
    • Handle: RePEc:eee:ecanpo:v:83:y:2024:i:c:p:966-977
    DOI: 10.1016/j.eap.2024.08.003
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    More about this item

    Keywords

    Competition policy; Market power; Anti-Monopoly Law; Labor income share;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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