Monopsonistic labor markets and international trade

Priyaranjan Jha and Antonio Rodriguez-Lopez

European Economic Review, 2021, vol. 140, issue C

Abstract: We study the impact of trade on wage inequality and welfare when the labor market is monopsonistic. Firm heterogeneity in productivity along with workers’ idiosyncratic preferences for different firms generate between-firm wage inequality for workers with identical skills. The model features a novel welfare channel of workers’ “love of firm variety.” Trade liberalization provides additional welfare gains through the firm-variety channel when monopsony power is high but detracts from welfare gains when monopsony power is low.

Keywords: Monopsonistic labor market; Wage inequality; Trade liberalization; Love of firm variety (search for similar items in EconPapers)
JEL-codes: F12 F13 F16 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Monopsonistic Labor Markets and International Trade (2019)
Working Paper: Monopsonistic Labor Markets and International Trade (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:140:y:2021:i:c:s0014292121002373

DOI: 10.1016/j.euroecorev.2021.103939

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