A company introduces a new technology that increases its output per worker by 20%. Simultaneously, due to decreased competition in its market, the company is able to increase its profit share on each unit sold from 25% to 40%. Given that the real wage paid to workers is the portion of output per worker not claimed as profit, what is the net effect on the real wage?

Impact of Competition Policy on Real Wages

Policy Levers for Increasing Real Wages

In an economy where the real wage is determined by the portion of output per worker not claimed by firms as profit, a government policy that successfully increases output per worker will guarantee a rise in the real wage.