Labor Market Power, Self-Employment, and Development

Francesco Amodio, Pamela Medina () and Monica Morlacco
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Pamela Medina: University of Toronto

No 2418, RF Berlin - CReAM Discussion Paper Series from Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM)

Abstract: This paper shows that self-employment shapes labor market power in low-income countries, affecting industrial development. Using Peruvian data, we show that wage-setting power increases with concentration, but less so where self-employment is more prevalent. A general equilibrium model shows that while concentration increases oligopsony power, it also raises labor supply elasticity by pushing workers into self-employment, thereby mitigating labor market power. Conversely, pro-competitive policies that draw workers into salaried jobs may increase labor market power, with limited overall impact. We demonstrate that these policies are only effective if they tackle labor market power.

Keywords: labor market power; monopsony; self-employment; sorting; development (search for similar items in EconPapers)
JEL-codes: J2 J3 J42 L10 O14 O54 (search for similar items in EconPapers)
Date: 2024-09
New Economics Papers: this item is included in nep-com, nep-iue and nep-lma
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Related works:
Working Paper: Labor Market Power, Self-Employment, and Development (2022)
Working Paper: Labor Market Power, Self-Employment, and Development (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:2418

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