Using a rich sample of firms in 14 EU countries from 2000-2016, we confirm increases in productivity dispersion, wage dispersion and superstar firms. Beyond reaffirming an incomplete pass-through from productivity to wages, we present novel empirical evidence of an even weaker pass-through in industries dominated by superstar firms. This effect is observed both in the lower and upper parts of the productivity and wage distributions, and is stronger for tradable (versus non tradable) sectors and markets with low (versus high) collective bargaining power. These findings point to different mechanisms, consistent with theoretical work and various underlying structural changes in the economy.
Bibliographical noteCopyright © 2023 The Authors. Economica published by John Wiley & Sons Ltd on behalf of London School of Economics and Political Science. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Funding: The authors acknowledge support from the European Union Horizon 2020 Research and Innovation action under grant agreement no. 822781, GROWINPRO (Growth Welfare Innovation Productivity) Work Package 3.6 – DE 3.9, and from Methusalem (METH/21/001).