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The B.E. Journal of Theoretical Economics

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Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

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Capital Concentration and Wage Inequality

Jiancai Pi / Yanwei Fan
Published Online: 2019-11-15 | DOI: https://doi.org/10.1515/bejte-2019-0049


This paper analyzes how capital concentration affects wage inequality through the channel of financial frictions. Higher capital concentration can be regarded as the Piketty effect. Under the framework of cost constrained financial frictions, we find that higher capital concentration will expand (resp. narrow down) wage inequality if the asset-liability ratio in the skilled sector is high (resp. low) enough relative to that in the unskilled sector.

Keywords: capital concentration; wage inequality; financial frictions

JEL Classification: J31; O16


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Published Online: 2019-11-15

Citation Information: The B.E. Journal of Theoretical Economics, Volume 20, Issue 1, 20190049, ISSN (Online) 1935-1704, DOI: https://doi.org/10.1515/bejte-2019-0049.

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