<p>This study presents a monopolistic competition model in which skilled labor exclusively participates in the intermediate goods sector, while unskilled labor is allocated to the final goods and service sectors, resulting in a unique equilibrium wage inequality. When the elasticity of substitution between capital and unskilled labor in the final-goods sector exceeds that between intermediate goods in the capital goods sector, an increase in skilled labor exacerbates wage inequality. Moreover, a certain level of goods-market competition is identified as a means to mitigate wage inequality. We establish a U-shaped relationship between wage inequality and goods-market competition, which implies that wage inequality may have intensified with the decline in goods-market competition since the 1980s.</p>