Question

How does market power affect wages for an advantaged group? How can our tools of supply and demand explain this?

Answer 1

Answer:

Firms gain bigger profits by increasing pricing and compensating their employees less due to enhanced market dominance, then shifting money from customers and employees to stockholders. Because owners are richer on aggregate than consumers and employees this relationship should, in theory, aggravate inequality.

The supply of labor in these low-skill occupations outnumbers the need. As desire for specialized labor outperforms supply, then wage gap among skilled as well as unskilled employees widens, as does the overall trend of increasing income disparity