This study empirically analyses the relationship between market imperfections and wage growth in the Indian manufacturing sector, underscoring rising inequality and unemployment in the sector. Using concentration indices, Kaleckian “mark-up,” and wage rate, relationships between market concentration, monopoly power, and wage growth are examined. A panel data analysis shows that the impact of market competition on industry wage structure is dialectical: firms with higher market power pay higher wages compared to competitors; however, if the market power translated into a monopoly position, then the company may resort to cost-cutting, leading to relatively decreasing wage growth. The panel regression shows that, other things held constant, fewer firms with prudential regulation for monopoly power would lead to higher wage growth.
