Firms as Electoral Monopsonies

Carlos Avenancio-Leon, Adelina Barbalau, Cyndi Hou and Alessio Piccolo

No 35676, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how dominant employers can act as *electoral monopsonies*, using local labor market power to shape political preferences and electoral outcomes. We first present original survey evidence showing that workers at major local employers are more likely to experience employer political communication and to report that their employers influence their voting behavior and career expectations. We then develop a model in which a dominant employer can affect voters’ preferences by shaping their expectations about how wages and employment depend on electoral outcomes. We distinguish a passive channel, through which workers internalize firms’ economic interests, from an active channel, through which dominant employers strategically influence these expectations. Under the active channel, labor market power translates into political power and can generate political failures by inducing voters to oppose policies they would otherwise support. The model also shows how electoral monopsonies can contribute to political polarization, constrain political platforms, and substitute for campaign spending. Using U.S. individual-level voting data and a shift-share design based on national industry concentration shocks and predetermined local employment shares, we show that greater electoral monopsony power increases Republican voter turnout. Counterfactual estimates imply that reducing electoral monopsony power could have narrowly changed the outcomes of the 2016 and 2024 presidential elections.

JEL-codes: D72 J42 P16 (search for similar items in EconPapers)
Date: 2026-08
New Economics Papers: this item is included in nep-com, nep-lma and nep-pol
Note: IO POL
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