Piotr Żoch presented "Markups, Labor Market Inequality and the Nature of Work” at the 2026 ASSA conference in Philadelphia.

The starting point of the presentation was the question of how an increase in markups affects the distribution of income, with particular emphasis on the structure of labor income. In contrast to much of the existing literature, which focuses on the division between labor and profits, the authors concentrated on the redistribution of income within labor itself, across different occupational groups. The key innovation of the study is the distinction between two types of labor: production (Y-type) labor, associated with the production of existing goods, and expansionary (N-type) labor, which includes activities such as research and development, management, marketing, logistics, and product design.

In the theoretical model presented, an increase in markups has opposite effects on the demand for the two types of labor. Production labor is negatively exposed to higher markups, whereas expansionary labor becomes more valuable as firms’ market power increases. This implies that changes in markups affect not only the relationship between labor and capital, but also lead to a redistribution of income among workers performing different tasks and representing different occupations.

The empirical part of the presentation focused on identifying the scale and nature of N-type labor in the U.S. economy. The authors showed that approximately 20 percent of total labor income can be attributed to expansionary activities. Rising markups are correlated with an increasing income share of occupations intensive in N-type labor—such as managerial, technological, and professional occupations—and with a declining share of more production-oriented jobs. Occupations intensive in expansionary labor have also experienced faster growth in wages and employment over recent decades.

The conclusions presented at ASSA 2026 have important implications for the analysis of inequality, competition policy, and macroeconomic policy. Viewing labor not only as a production factor but also as an expansionary input allows for a better understanding of the distributional consequences of changes in market structure, globalization, and monetary policy.