Labor Market Power

David Berger, Kyle Herkenhoff and Simon Mongey

American Economic Review, 2022, vol. 112, issue 4, 1147-93

Abstract: 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-codes: E25 H71 J24 J31 J42 R23 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Labor Market Power (2021)
Working Paper: Labor Market Power (2019)
Working Paper: Labor Market Power (2019)
Working Paper: Labor Market Power (2019)
Working Paper: Labor Market Power (2019)
Working Paper: Labor Market Power (2018)
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DOI: 10.1257/aer.20191521

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