## Book Review: The Profit Paradox by Jan Eeckhout – IMF F&D ## Source details **Canonical URL:** [Book Review: The Profit Paradox by Jan Eeckhout – IMF F&D](https://www.imf.org/en/publications/fandd/issues/2021/06/book-review-the-profit-paradox-eeckhout) ## Other formats - [Markdown version](/en/publications/fandd/issues/2021/06/book-review-the-profit-paradox-eeckhout/index.md) - [Structured JSON version](/en/publications/fandd/issues/2021/06/book-review-the-profit-paradox-eeckhout/index.json) - [Bundle manifest](/en/publications/fandd/issues/2021/06/book-review-the-profit-paradox-eeckhout/bundle-manifest.json) ## Bibliographic details - Authors: ROMAIN DUVAL - Published: June 1, 2021 --- ### Overview - Reviewer: ROMAIN DUVAL, assistant director, IMF Research Department. - Publication: F&D Magazine, Market Juggernauts, June 2021. - Work reviewed: The Profit Paradox: How Thriving Firms Threaten the Future of Work, Jan Eeckhout, Princeton University Press, Princeton, NJ, 2021, 336 pp., $27.95. - Meta: Less than a minute(0 words) Read; Download PDF. ### Central thesis - New technologies retain potential to deliver large gains in living standards for all, but the rise of dominant firms is preventing those gains from being broadly shared. - Dominant firms arise from the winner-takes-all nature of new technologies combined with weak pro-competition policies. - Massive corporate profits and booming stock markets have not translated into benefits for workers — the “profit paradox.” ### Mechanisms and linkages - Market power concentrates gains with firms and top incomes while low- and medium-skilled-worker wages stagnate or fall, contributing to a decline in labor’s share of income. - Dominant firms amplify broader social and policy problems, including: - declining social and geographical mobility, - rising mortality, - climate change, via firms leveraging power to buy political inaction or promote harmful policies (example: opioids). ### Empirical and narrative evidence - The book mixes cutting-edge academic research, personal stories, and sectoral examples (beer, textiles, online advertising) to connect workers’ woes and market power. - U.S.-focused examples prompt questions about international variation: - Labor force participation has not fallen in Europe in recent decades. - Increases in wage inequality and declines in labor income shares have been much more modest in Europe than in the United States. - Europe stopped converging to US living standards four decades ago. - These facts raise questions about whether differences stem from lesser embrace of new technologies, stronger antitrust enforcement, both, or other factors. ### Open questions and limitations noted by the reviewer - The book convincingly assigns some role to market power but leaves unresolved how large that role is. - Alternative explanations remain: for example, the increasingly labor-saving nature of technological progress (work by Daron Acemoğlu and Pascual Restrepo) might have harmed workers even if market power had been contained. - The reviewer asks: If technological change alone would have hurt workers, would addressing market power be sufficient to restore broadly shared prosperity? ### Policy recommendations and proposals highlighted - Strengthen antitrust enforcement. - Rethink intellectual property rights. - Specific proposals from the book include: - Ex-post fines on mergers that fail to deliver promised benefits. - “Inverse” data patents that grant collectors of data only temporary exclusivity. - The reviewer frames Eeckhout’s advocacy as timely given ongoing reconsideration of antitrust frameworks on both sides of the Atlantic and concludes the rethink “must go big.” *IMF F&D book review by ROMAIN DUVAL (June 2021).* --- ## Content in this bundle - **استعراض الكتب** - [استعراض الكتب (Markdown version)](/-/media/files/publications/fandd/article/2021/june/ar/book3-ar.pdf.md){rel="alternate" type="text/markdown"} - [استعراض الكتب (PDF)](/-/media/files/publications/fandd/article/2021/june/ar/book3-ar.pdf){rel="external" type="application/pdf"} - **Book Review: The Profit Paradox by Jan Eeckhout – IMF F&D** - [Book Review: The Profit Paradox by Jan Eeckhout – IMF F&D (Markdown version)](/-/media/files/publications/fandd/article/2021/june/book-review-the-profit-paradox-eeckhout.pdf.md){rel="alternate" type="text/markdown"} - [Book Review: The Profit Paradox by Jan Eeckhout – IMF F&D (PDF)](/-/media/files/publications/fandd/article/2021/june/book-review-the-profit-paradox-eeckhout.pdf){rel="external" type="application/pdf"} - **《盈利悖论：蓬勃发展的公司如何威胁未来的就业》 - 书评 - 金融与发展 - 国际货币基金组织季刊 -2021年6月号·第58卷** - [《盈利悖论：蓬勃发展的公司如何威胁未来的就业》 - 书评 - 金融与发展 - 国际货币基金组织季刊 -2021年6月号·第58卷 (Markdown version)](/-/media/files/publications/fandd/article/2021/june/chn/book3-chn.pdf.md){rel="alternate" type="text/markdown"} - [《盈利悖论：蓬勃发展的公司如何威胁未来的就业》 - 书评 - 金融与发展 - 国际货币基金组织季刊 -2021年6月号·第58卷 (PDF)](/-/media/files/publications/fandd/article/2021/june/chn/book3-chn.pdf){rel="external" type="application/pdf"} - **Gigantes del mercado ● Finanzas y Desarrollo ● Junio de 2021** - [Gigantes del mercado ● Finanzas y Desarrollo ● Junio de 2021 (Markdown version)](/-/media/files/publications/fandd/article/2021/june/es/book-review-the-profit-paradox-eeckhout-es.pdf.md){rel="alternate" type="text/markdown"} - [Gigantes del mercado ● Finanzas y Desarrollo ● Junio de 2021 (PDF)](/-/media/files/publications/fandd/article/2021/june/es/book-review-the-profit-paradox-eeckhout-es.pdf){rel="external" type="application/pdf"} - **Puissance mondiale, fragilité intérieure** - [Puissance mondiale, fragilité intérieure (Markdown version)](/-/media/files/publications/fandd/article/2021/june/fr/book-review-the-profit-paradox-eeckhout-fr.pdf.md){rel="alternate" type="text/markdown"} - [Puissance mondiale, fragilité intérieure (PDF)](/-/media/files/publications/fandd/article/2021/june/fr/book-review-the-profit-paradox-eeckhout-fr.pdf){rel="external" type="application/pdf"} - **Книжное обозрение – Финансы и развитие – Формирующиеся рынки — что впереди?– июнь 2021 года** - [Книжное обозрение – Финансы и развитие – Формирующиеся рынки — что впереди?– июнь 2021 года (Markdown version)](/-/media/files/publications/fandd/article/2021/june/ru/book3-ru.pdf.md){rel="alternate" type="text/markdown"} - [Книжное обозрение – Финансы и развитие – Формирующиеся рынки — что впереди?– июнь 2021 года (PDF)](/-/media/files/publications/fandd/article/2021/june/ru/book3-ru.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2021/06/book-review-the-profit-paradox-eeckhout_