Economy

Jul 9, 2018

New study shows wages aren’t growing when market power does

A new study from one of the key institutions of neoliberalism shows that as companies become more dominant, they invest less and pay lower wages.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

money wages

A new International Monetary Fund global study shows that growing market concentration has delivered wins for corporations at the expense of both investment and wages -- findings with serious implications for company tax cuts.

The study, released last month, examines thousands of publicly traded companies across 76 economies, examining the extent to which they have increased the gap between prices and marginal costs since 1980 -- a key indicator of market power. In advanced economies, firms have been able to increase their mark-ups by 39% across that period, which has coincided with financial deregulation, privatisation and several waves of mergers and acquisitions, including the massive late 1990s wave of M&A activity.

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