New technologies and evolving market structures

This Chapter investigates the relationship between technological changes, labour market frictions, and firms’ labour market power. We provide guidance through the main trends that characterised labour markets during the last decades as well as through the literature on technology adoption, firms’ concentration in the product market, and firms’ labour market power. We discuss how new technologies can change the matching process in the labour market. We complement this with a descriptive analysis of firms’ labour market power in two large OECD economies, the United States and Italy, that investigates heterogeneities across sectors that are exposed to different levels of innovation. We also present a descriptive analysis of how the recent economic shock induced by the COVID-19 pandemic can affect the firms’ labour market power. We discuss the policy implications as well as potential developments for future research.