Competition Policy and the Labour Share

Competition Policy and the Labour Share, upcoming in The Journal of Law, Economics, and Organization

36 Pages Posted: 17 Apr 2021 Last revised: 18 Apr 2023

See all articles by Amit Zac

Amit Zac

ETH Zürich; University of Amsterdam - University of Amsterdam Faculty of Law

Carola Casti

University of Oxford

Christopher Decker

University of Oxford

Ariel Ezrachi

University of Oxford - Faculty of Law

Date Written: April 11, 2021

Abstract

Recent years have seen intense debate about the causes of the observed decline in the labour share. We extend this inquiry by investigating whether the design and enforcement of competition law and policy are associated with changes in the labour share. Using a panel of 22 industries in 12 OECD economies we find a positive statistical association between the effectiveness of competition policy and changes in the labour share over the period 1995-2005. This suggests a potential link between the design and effectiveness of competition policy and the labour share, and more broadly to distributional outcomes. Our results reinforce the importance of accounting for country-specific factors, including the design and enforcement of local laws, when examining dynamics in the labour share. The analysis implies that effective competition law and policy could mitigate the decline of the labour share, particularly in settings characterised by low levels of labour protection and limited labour bargaining power.

Keywords: Competition policy, Economic inequality, Labour share, Market power

JEL Classification: C23, D2, J3, K21, L4‎

Suggested Citation

Zac, Amit and Casti, Carola and Decker, Christopher and Ezrachi, Ariel, Competition Policy and the Labour Share (April 11, 2021). Competition Policy and the Labour Share, upcoming in The Journal of Law, Economics, and Organization, Available at SSRN: https://ssrn.com/abstract=3824115 or http://dx.doi.org/10.2139/ssrn.3824115

Amit Zac (Contact Author)

ETH Zürich ( email )

LEE G104
Leonhardstrasse 21
Zurich
Switzerland

HOME PAGE: http://https://lawecon.ethz.ch/group/scientific-team/zac.html

University of Amsterdam - University of Amsterdam Faculty of Law ( email )

Postbus 15654
1001 ND
Amsterdam, Noord-Holland 1001 ND
Netherlands

Carola Casti

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Christopher Decker

University of Oxford ( email )

Manor Road Building
Manor Road
Oxford, Oxfordshire OX1 3UQ
United Kingdom

Ariel Ezrachi

University of Oxford - Faculty of Law ( email )

Oxford
United Kingdom

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