Rent, Rent-Seeking, and Social Inequality

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

The compensation paid out to workers reflects (i) the value of their contribution to their firm or organization and (ii) a possible premium because of restrictions on competition. The latter restrictions, which may take the form of corruption or monopolies that preclude labor from freely flowing throughout the economy, allow for various types of rent to be extracted. This essay addresses the way in which rents may arise, the sectors of the labor market that are gaining new opportunities to extract rent, and the sectors of the labor market that are losing the capacity to extract rent. Although it is typically argued that all forms of rent are gradually withering away, the available evidence suggests, to the contrary, that rent destruction is mainly occurring at the bottom of the class structure. At the top of the class structure, new opportunities to collect rent appear to be emerging, opportunities that raise earnings among the already privileged and thus increase income inequality. The foregoing characterization of the evidence, although not without support, is necessarily controversial because of intrinsic difficulties in distinguishing the true marginal contribution of workers from returns that are attributable to market failure.
Original languageEnglish (US)
Title of host publicationEmerging Trends in the Social and Behavioral Sciences
Subtitle of host publicationAn Interdisciplinary, Searchable, and Linkable Resource
EditorsRobert A Scott, Marlis C Buchmann
PublisherJohn Wiley & Sons, Inc.
ISBN (Electronic)9781118900772
DOIs
StatePublished - 2015

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  • Cite this

    Red Bird, B. J. O. O., & Grusky, D. B. (2015). Rent, Rent-Seeking, and Social Inequality. In R. A. Scott, & M. C. Buchmann (Eds.), Emerging Trends in the Social and Behavioral Sciences: An Interdisciplinary, Searchable, and Linkable Resource John Wiley & Sons, Inc.. https://doi.org/10.1002/9781118900772.etrds0282