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Product Market Competition and Returns to Talent

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  • Jen Baggs
  • Jean‐Etienne de Bettignies
  • John Ries

Abstract

This paper investigates how product market competition influences the wages paid to workers and the distribution of talent across industries. We develop a model where firms facing different competitive conditions bid for workers. The model predicts that wages are increasing in talent, decreasing in competition, and the interaction between talent and competition is positive. In addition, the most talented workers will be concentrated in competitive industries and talent dispersion rises with competition. We use linked employee–employer data to test these predictions.

Suggested Citation

  • Jen Baggs & Jean‐Etienne de Bettignies & John Ries, 2013. "Product Market Competition and Returns to Talent," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 569-593, September.
    • Handle: RePEc:bla:jemstr:v:22:y:2013:i:3:p:569-593
    DOI: 10.1111/jems.12020
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    References listed on IDEAS

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    Cited by:

    1. Fabio Feriozzi, 2016. "Career Concerns and Product Market Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(2), pages 370-399, April.

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