Labor Market Power

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)

• Publication year

  2019

• Venue

  Social Science Research Network

• Publication date

  2019-03-01

• Fields of study

  Economics

• Identifiers
  DOI 10.3386/W25719
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

• Declining Labor and Capital Shares

  2020cited by this paper
• Concentration in US labor markets: Evidence from online vacancy data

  2020cited by this paper
• The Rise of Market Power and the Macroeconomic Implications*

  2020cited by this paper
• Monopsony in Online Labor Markets

  2020cited by this paper
• Do High-Wage Jobs Attract More Applicants? Directed Search Evidence from the Online Labor Market

  2019cited by this paper
• Exploitation of labor? Classical monopsony power and labor's share

  2019cited by this paper
• Preliminary and Incomplete version of July 12 , 2019 1 Megafirms and Monopsonists : Not the same employers , not the same workers

  2019cited by this paper
• The Effect of Minimum Wages on Low-Wage Jobs*

  2019cited by this paper
• State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data

  2019cited by this paper
• Firms and Labor Market Inequality: Evidence and Some Theory

  2018cited by this paper
• Labor Market Concentration, Earnings Inequality, and Earnings Mobility

  2018cited by this paper
• Diverging Trends in National and Local Concentration

  2018cited by this paper
• The Effects of Industry Classification Changes on US Employment Composition

  2018cited by this paper
• WHO PROFITS FROM PATENTS? RENT-SHARING AT INNOVATIVE FIRMS.

  2018cited by this paper
• Labor Market Concentration and the Demand for Skills

  2018cited by this paper
• The Fall of the Labor Share and the Rise of Superstar Firms*

  2017influential reference
• Productivity and Misallocation in General Equilibrium*

  2017cited by this paper
• Inequality and the disappearing large firm wage premium

  2017cited by this paper
• High Wage Workers Work for High Wage Firms

  2017cited by this paper
• Firm-Level Monopsony and the Gender Pay Gap

  2016cited by this paper
• Investmentless Growth: An Empirical Investigation

  2016cited by this paper
• Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms

  2016cited by this paper
• A Century of Capital Structure: The Leveraging of Corporate America

  2016cited by this paper
• Importers, exporters, and exchange rate disconnect

  2014cited by this paper
• The Global Decline of the Labor Share

  2014cited by this paper
• Random Choice over a Continuous Set of Options

  2013cited by this paper
• Review of Estimates of the Frisch Elasticity of Labor Supply: Working Paper 2012-13

  2012cited by this paper
• Micro and Macro Labor Supply Elasticities: A Reassessment of Conventional Wisdom

  2012cited by this paper
• Imperfect Competition in the Labor Market

  2011cited by this paper
• Is There Monopsony in the Labor Market? Evidence from a Natural Experiment

  2010cited by this paper
• Labor Market Monopsony

  2010cited by this paper
• Federal Reserve Bank of San Francisco Working Paper Series Pricing-to-market, Trade Costs, and International Relative Prices Pricing-to-market, Trade Costs, and International Relative Prices *

  2007cited by this paper
• The establishment-size wage premium: evidence from European countries

  2005cited by this paper
• Monopsony in Motion - Imperfect Competition in Labor Markets.

  2004cited by this paper
• The Effect of Expected Income on Individual Migration Decisions

  2003cited by this paper
• Oligopsony and monopsonistic competition in labor markets

  2002cited by this paper
• Wage Differentials, Employer Size, and Unemployment

  1998cited by this paper
• The nested logit model and representative consumer theory

  1996cited by this paper
• The Employer Size-Wage Effect

  1989cited by this paper
• The CES is a discrete choice model

  1987cited by this paper
• Monopolistic competition with outside goods

  1979cited by this paper
• Investment in Human Capital: A Theoretical Analysis

  1962cited by this paper
• Stability in Competition

  1929cited by this paper

• Labour market concentration and posted wages: Evidence on wage-setting power from a large online recruitment platform in China

  2026cites this paper
• Judicial independence and firms’ labor share: Evidence from a quasi-natural experiment in China

  2026cites this paper
• ¿Acelerador o freno? Los efectos duales de la inversión extranjera en el bienestar mexicano

  2026cites this paper
• Does Artificial Intelligence Bind Labor Market Power? Evidence from Listed Manufacturing Firms in China

  2026cites this paper
• Labor Market Power: From Micro Evidence to Macro Consequences

  2026cites this paper
• Can strengthened financial regulation reduce monopsony power in superstar firms? Evidence from China's asset management reform

  2026cites this paper
• Exploiting or Augmenting Labor?

  2026influential citation
• Monetary unions with heterogeneous fiscal space

  2025cites this paper
• Strategic Complementarity in Labor Demand: Evidence from US Industry Leading Firms

  2025cites this paper
• Farmworker bargaining in US agricultural labor markets

  2025cites this paper
• On-the-job search and the productivity-wage gap

  2025cites this paper
• Labor Market Monopsony: Fundamentals and Frontiers

  2025cites this paper
• The Evolution of US Retail Concentration

  2025cites this paper
• Occupational mismatch and market power

  2025cites this paper
• Macroeconomic factors, firm-level financial characteristics and stock returns: the Case of the US energy

  2025cites this paper
• Do Workforce Development Programs Bridge the Skills Gap

  2025cites this paper
• Job search under changing labour taxes

  2025cites this paper
• Empowering Sustainable Growth: The Critical Role of Entrepreneurial Frameworks in Development

  2025cites this paper
• Concentration and Markups in International Trade

  2025cites this paper
• Research on wage distortion in R&D and innovation activities —— Evidence from China's listed manufacturing enterprises

  2025cites this paper
• Minimum Wages and Homelessness

  2025cites this paper
• Collective Bargaining for Women: How Unions Can Create Female-Friendly Jobs

  2025influential citation
• Monopsony and Non-Competitive Labour Markets: Workers' Weakening Bargaining Position

  2025cites this paper
• The Evolution and Influencing Factors of Labor Market Monopsony in China's Manufacturing Sector: Based on the Production Function Approach

  2025cites this paper
• Minimum Wages, Efficiency, and Welfare

  2025cites this paper
• How Do Establishments Choose Their Location? Taxes, Monopsony, and Productivity

  2025cites this paper
• The Power to Discriminate

  2025cites this paper
• Climate finance and the labor income share of enterprises: Evidence from China

  2025cites this paper
• Discrete/continuous choice models and representative consumer theory

  2025cites this paper
• The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence Using a Partially Pre-Committed Analysis Plan

  2025cites this paper
• Labour market frictions across worker types

  2025cites this paper
• Digital transformation and wage distortion in R&D and innovation activities - Causal inference based on double machine learning

  2025cites this paper
• Labor Market Power, Self-Employment, and Development

  2025cites this paper
• Labor Market Power and Development

  2025cites this paper
• Monopsonistic Labour Markets

  2025cites this paper
• The critical role of digital infrastructure in inequality: New evidence from urban-rural consumption in China

  2025cites this paper
• Robinson Meets Roy: Monopsony Power and Comparative Advantage

  2025cites this paper
• Corporate taxation and market power wealth

  2025cites this paper
• Firm Dynamics, Monopsony, and Aggregate Productivity Differences

  2025cites this paper
• Monopsony in labor markets: Not important in the aggregate

  2025cites this paper
• Misperception and informativeness in statistical discrimination

  2025cites this paper
• Estimating Factor Price Markdowns Using Production Models

  2025cites this paper
• The divergent dynamics of labor market power in Europe

  2025cites this paper
• The impact of social insurance contribution collection system reform on labour share: evidence from a quasi-natural experiment in China

  2025cites this paper
• Union Bargaining Power and the Amenity-Wage Tradeoff

  2025cites this paper
• Firm Responses and Wage Effects of Foreign Demand Shocks with Fixed Labor Costs and Monopsony

  2025cites this paper
• The incidence of grocery taxes in US food and factor markets

  2025cites this paper
• Labor Market Concentration in Germany

  2025cites this paper
• Self-efficacy in using artificial intelligence as a shield: mitigating the detrimental effects of organizationally prescribed perfectionism on employee stress and anxiety

  2025cites this paper
• Monopsony: Wages, Wage Bargaining and Job Requirements

  2025cites this paper
• Can employee welfare policies insure workers against fluctuations in employment?

  2025cites this paper
• Competition policy and labour market power: new evidence and open questions

  2025cites this paper
• Bidding for Talent: A Test of Conduct in a High-Wage Labor Market

  2025cites this paper
• Impacts of an employer’s contributory pillar: evidence from Chile

  2025cites this paper
• Colluding Against Workers

  2025cites this paper
• Labor market concentration and the gender wage gap

  2025cites this paper
• Influential Information Supply or Just a Modern Pillory? Investor Perceptions of the CEO Pay Ratio Disclosure Rule

  2025cites this paper
• Production and Externalities: The Role of Corporate Governance

  2025cites this paper
• The impact of developers’ market power on the launch prices of new houses in Malaysia

  2025cites this paper
• Organized Labor, Labor Market Imperfections, and Employer Wage Premia

  2024cites this paper
• Partially directed search in the labor market

  2024cites this paper
• The Labor Market Power of Exporting Firms: Evidence from Latin America

  2024cites this paper
• Labor market monopsony power in the manufacturing sector of four Sub‐Saharan African countries

  2024cites this paper
• Labor market power and worker turnover

  2024cites this paper
• Trade Liberalization and Labor Monopsony: Evidence from Chinese Firms

  2024cites this paper
• Short-term impact of climate change on labor market in China: Quantitative spatial analysis based on an oligopsony model

  2024cites this paper
• Monopsony in the market for religion

  2024cites this paper
• Conflict between consumer and worker surpluses under monopoly power

  2024cites this paper
• Business Dynamism with Endogenous Markup

  2024cites this paper
• Estimating the Cost of Capital and the Profit Share

  2024influential citation
• Competition Policy and Enterprise Competitiveness: Catalyst or Barrier?

  2024cites this paper
• An Empirical Framework For Matching With Imperfect Competition

  2024cites this paper
• How do ex ante review systems improve firms' labor income shares: Empirical evidence from the fair competition review system

  2024cites this paper
• The Implications of Routine‐Biased Technological Change on Hours Worked Fluctuations*

  2024cites this paper
• Competition in the Labor Market: The Wage Effect of Employer Concentration in China

  2024cites this paper
• Workers, Workplaces, Sorting, and Wage Dispersion in Mexico

  2024cites this paper
• An Engine of (Pay) Growth? Productivity and Wages in the UK Auto Industry

  2024cites this paper
• The Gender Pay Gap: Micro Sources and Macro Consequences

  2024cites this paper
• Monopsony Power in the Labor Market: From Theory to Policy

  2024cites this paper
• The skilled worker premium and labor's share of income: Recent trends in U.S. manufacturing

  2024cites this paper
• Voluntary Minimum Wages

  2024cites this paper
• Cracks in the Glass Ceiling and Gender Equality: Do Exports Shatter the Glass Ceiling?

  2024cites this paper
• Walras–Bowley Lecture: Market Power and Wage Inequality

  2024cites this paper
• A Comment on: “Walras–Bowley Lecture: Market Power and Wage Inequality” by Shubhdeep Deb, Jan Eeckhout, Aseem Patel, and Lawrence Warren

  2024cites this paper
• Exploration on the Application of Speech Recognition Model in Power Marketing

  2024cites this paper
• The Exchange Rate as an Industrial Policy

  2024cites this paper
• Wage Spillovers across Sectors: Evidence from a Localized Public-Sector Wage Cut

  2024cites this paper
• U.S. Worker Mobility Across Establishments within Firms: Scope, Prevalence, and Effects on Worker Earnings

  2024cites this paper
• Minimum Wages and Insurance within the Firm

  2024cites this paper
• Comment

  2024cites this paper
• Collective Bargaining, Unions, and the Wage Structure: An International Perspective

  2024cites this paper
• The Effect of Franchise No-Poaching Restrictions on Worker Earnings

  2024cites this paper
• Investment-Goods Market Power and Capital Accumulation

  2024cites this paper
• Retail Concentration and Wages

  2024cites this paper
• Superstars or Supervillains? Large Firms in the South Korean Growth Miracle

  2024cites this paper
• The Slow Diffusion of Earnings Inequality

  2023cites this paper
• Monopsony power in the United States: Evidence from the Great Depression

  2023cites this paper
• Skill demand and labour market concentration: evidence from Italian vacancies

  2023cites this paper
• Labor Market Power and Development

  2023cites this paper
• Labor Market Concentration, Automation, and Labor Share *

  2023influential citation