In an economic model where a firm's price-setting behavior determines the real wage, suppose there is a significant decrease in market competition, allowing firms to increase their profit margins. What is the direct consequence for the portion of each worker's output that is paid out as wages?

Calculating Wage Share and Real Wage

Productivity and Wage Share

In an economic model where firms determine prices by applying a fixed percentage markup over their labor costs, a widespread technological improvement that boosts the average output per worker will cause the proportion of that output paid to workers as wages to increase.

Analyzing Economic Data with the Price-Setting Model

Formula for Firm's Profit per Worker in the Price-Setting Model