A profile of Jan Eeckhout and his focus on labor markets
Jan Eeckhout has held professorships at esteemed institutions including New York University, Princeton, the University of Pennsylvania, and the University of London. He currently resides in Barcelona and serves as an ICREA research professor in the Department of Economics and Business at Pompeu Fabra University. After earning a PhD in Economics from the London School of Economics in 1998, Eeckhout has concentrated his research on power concentration and its impact on labor markets, offering rigorous analysis and broad expertise on market dynamics.
The book Profit Paradox, published by Boga in 2022, presents a clear argument: the success of large corporations often translates into higher inequality rather than broader wage growth for workers. The tech giants headquartered in Silicon Valley—Alphabet, Apple, Amazon, Microsoft, Meta, Nvidia and Tesla—are highlighted as leading examples. Their monopolistic practices illustrate a risk to society that transcends any single industry, illustrating how scale can affect labor markets and social outcomes.
The assertion that Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla now account for about 29% of the total S&P 500 value raises questions about whether we are witnessing an unprecedented concentration of market power. The trend is described as worrying because these seven companies drive a large share of growth in the U.S. stock market, signaling a shift in competitive balance that affects workers and smaller firms alike.
Eeckhout argues that the most commercially successful firms do not necessarily strengthen the broader economy through competition. Rather, their strength often comes from maintaining dominant positions, which may dampen competitive pressures and slow innovation among smaller players. Technology firms have undeniably boosted living standards, yet their market power can restrict competitors and keep prices higher than in a fully competitive environment. The overall effect is a mixed picture: advantage and efficiency on one hand, and reduced dynamism for smaller firms on the other.
Large corporations continue to innovate, but the aim is frequently to protect their dominant market stance rather than to pursue sweeping, transformative changes. While the feats achieved by these firms are remarkable, they do not automatically grant a universal license to reshape markets. Uncertainty remains about whether existing regulations effectively curb concentration, and a crucial question centers on how much money these firms are willing to invest to sustain control.
The European Union’s Digital Markets Act is examined as a step to curb monopolistic practices in technology. Eeckhout notes that the digital market behaves like a natural monopoly, similar to the energy sector, yet its products are not homogeneous. Consequently, regulation is inherently more complex. He points out that while Google and Apple face similar regulatory pressures, their differences matter in practice. The ambition of European law is clear, and potential shifts such as enabling cross-platform messaging could unfold in the near term, with real effects on the ecosystem. As users, the costs of absent regulation may remain invisible, but the broader benefits of a regulated environment become more evident over time. The analogy to aviation or medicine shows that regulation can be seen as a public good that helps maintain competitive balance even if individuals do not notice the direct impact immediately.
The consequences of concentrated market power on labor markets are multifaceted. Eeckhout highlights that issues like wage stagnation across broad segments of workers are not solely the result of monopolies in technology. Large firms in other sectors, such as fashion retailers, can also suppress opportunities for growth, particularly for small businesses that cannot compete with data advantages held by giants like Amazon. Monopolies tend to increase economic inequality, a driver of polarization, and can contribute to a sense of disquiet among the workforce. Greater inequality can undermine social cohesion and political stability, underscoring the importance of competitive dynamics for democracy.
Turning to artificial intelligence and the workplace, Eeckhout notes that the wage gap between college graduates and non-graduates widened gradually from the 1980s through the 2020s. The pace of change has accelerated recently, and AI could be a contributing factor. He suggests that inequality may widen further as AI impacts the distribution of labor value and opportunities.
Regarding startup activity, Eeckhout observes a recurring tension: productivity gains must be coupled with competitive environments to translate into real opportunity. He notes that promotional efforts for startups require a competition policy that closes the gap between productivity and wages. If competition is weak, social problems like inequality persist, and local policies may fail to solve broader, global challenges. He cautions that European regulation alone cannot reshape outcomes worldwide and that aggressive protectionism could undermine innovation elsewhere. History shows that even industries long resistant to competition eventually benefit from consumer-friendly reforms.
The book argues that redistribution hinges on stronger competition and greater globalization. While globalization and job displacement are ongoing phenomena, Eeckhout emphasizes the need for a coherent global competition framework to manage these forces and protect workers. In addressing political economy dynamics, he suggests that openness and robust competition policy can help create a more equitable labor landscape while maintaining the benefits of global trade.
On the question of globalization as a remedy, Eeckhout argues that the policy mix must balance openness with competitive safeguards. Protectionist trends in strategic sectors can raise domestic costs for consumers, while bold reform via coordinated antitrust and competition policies could yield more sustainable gains. The experience of telcos demonstrates that competition regimes, even when resisted, ultimately benefit consumers through improved choices and pricing.