Labor Market Power

David Berger, Kyle Herkenhoff, Simon MongeyEconomics劳动经济学FT50

American Economic Review2022-03-31Duke University; University of Minnesota; Federal Reserve Bank of Minneapolis; University of ChicagoDOI

Citations231

We develop, estimate, and test a tractable general equilibrium model of oligopsony with differentiated jobs and concentrated labor markets. We estimate key model parameters by matching new evidence on the relationship between firms’ local labor market share and their employment and wage responses to state corporate tax changes. The model quantitatively replicates quasi-experimental evidence on imperfect productivity-wage pass-through and strategic wage setting of dominant employers. Relative to the efficient allocation, welfare losses from labor market power are 7.6 percent, while output is 20.9 percent lower. Lastly, declining local concentration added 4 percentage points to labor’s share of income between 1977 and 2013. (JEL E25, H71, J24, J31, J42, R23)

EconomicsMarket powerWageProductivityMatching (statistics)Labour economicsWelfareImperfectWage shareEfficiency wageMicroeconomicsMacroeconomics