Monopsony in the US Labor Market Yeh, Chen; Macaluso, Claudia; Hershbein, Brad
The American economic review,
07/2022, Letnik:
112, Številka:
7
Journal Article
Recenzirano
Odprti dostop
This paper quantifies employer market power in US manufacturing and how it has changed over time. Using administrative data, we estimate plant-level markdowns—the ratio between a plant’s marginal ...revenue product of labor and its wage. We find most manufacturing plants operate in a monopsonistic environment, with an average markdown of 1.53, implying a worker earning only 65 cents on the marginal dollar generated. To investigate long-term trends for the entire sector, we propose a novel, theoretically grounded measure for the aggregate markdown. We find that it decreased between the late 1970s and the early 2000s, but has been sharply increasing since. (JEL J24, J31, J38, J42, L13, L60)
Strong Employers and Weak Employees Benmelech, Efraim; Bergman, Nittai K.; Kim, Hyunseob
The Journal of human resources,
04/2022, Letnik:
57, Številka:
S
Journal Article
Who Set Your Wage? Card, David
The American economic review,
04/2022, Letnik:
112, Številka:
4
Journal Article
Recenzirano
I discuss the recent literature that has led to new interest in the idea of monopsonistic wage setting. Building on advances in search theory and in models of differentiated products, researchers ...have used a number of different strategies to identify the elasticity of firm-specific labor supply. A growing consensus is that firms have some wage-setting power, though many questions remain about the sources of that power. (JEL B21, D21, D24, D43, J22, J31, J42)
Abstract
We develop a model of international trade with heterogeneous firms and monopsonistically competitive labour markets. We show that due to monopsonistic competition our model makes sharply ...different predictions about the effects of the export of goods and the offshoring of tasks. Trade in goods is unambiguously welfare increasing as domestic resources are reallocated to large firms with high productivity and firms with low productivities exit the market thereby reducing the monopsony distortion present in autarky. Offshoring, however, gives firms additional scope for exercising monopsony power by reducing their domestic size and therefore can lead to welfare losses.
This paper updates the available evidence on the public-private wage gap in Spain, which dates back to 2012. Through microdata drawn from the last three waves of the Wage Structure Survey (2010, 2014 ...and 2018), we study how this gap and its distribution by gender and education have evolved during and after the Great Recession. Conventional Oaxaca-Blinder decompositions are used to divide the raw wage gap into a component explained by differences in characteristics and another one capturing differences in returns and endogenous selection. The main findings are: (i) a strong wage compression by skills, and (ii) a wage premium for less-skilled women in the public sector. Both empirical results can be rationalised by a monopoly union wage-setting model with monopsonistic features and the presence of female statistical discrimination.
This paper uses firm-level panel data of on-the-job training to estimate its impact on productivity and wages. To this end, we apply and extend the control function approach for estimating production ...functions, which allows us to correct for the endogeneity of input factors and training. We find that the productivity premium of a trained worker is substantially higher compared to the wage premium. Our results are consistent with recent theories that explain work-related training by imperfect competition in the labor market.
Using the Longitudinal Employer Household Dynamics (LEHD) data from the United States Census Bureau, I compute firm-level measures of labor market (monopsony) power. To generate these measures, I ...extend the empirical strategy of Manning (2003) and estimate the labor supply elasticity facing each private non-farm firm in the U.S. While a link between monopsony power and earnings has traditionally been assumed, I provide the first direct evidence of the positive relationship between a firm's labor supply elasticity and the earnings of its workers. I also contrast the dynamic model strategy with the more traditional use of concentration ratios to measure a firm's labor market power. In addition, I provide several alternative measures of labor market power which account for potential threats to identification such as endogenous mobility. Finally, I construct a counterfactual earnings distribution which allows the effects of firm market power to vary across the earnings distribution.
I estimate the average labor supply elasticity to the firm to be 1.08, however my findings suggest that there is significant variability in the distribution of firm market power across U.S. firms, and that dynamic monopsony models are superior to the use of concentration ratios in evaluating a firm's labor market power. I find that a one-unit increase in the labor supply elasticity to the firm is associated with earnings gains of between 5 and 16%. While nontrivial, these estimates imply that firms do not fully exercise their labor market power over their workers. Furthermore, I find that the negative earnings impact of a firm's market power is strongest in the lower half of the earnings distribution, and that a one standard deviation increase in the labor supply elasticity to the firm reduces the variance of the earnings distribution by 9%.
•Use linked employer–employee data to estimate dynamic labor supply model•First to estimate firm-level labor supply elasticities•Average firm is fairly monopsonistic, but there is a wide distribution.•First to demonstrate link between firm labor supply elasticity and worker earnings
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