Exploitation of labor? Classical monopsony power and labor's share
Wyatt J. Brooks,
Yao Amber Li and
Journal of Development Economics, 2021, vol. 150, issue C
How important is the exercise of classical monopsony power against labor for the level of wages and labor's share? We examine this in the context of China and India – two large, rapidly-growing developing economies. Using theory, we develop a novel method to quantify how wages are affected by the exertion of market power in labor markets. The theory guides the measurement of labor “markdowns,” i.e., the gap between wage and the value of the marginal product of labor, and the method examines how they comove with local labor market share. Applying this method, we find that market power substantially lowers labor's share of income: by up to 11 percentage points in China and 13 percentage points in India. This impact has fallen over time in both countries, however.
Keywords: Manufacturing; Aggregate labor's share; Market power; Monopsony power; China; India (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Exploitation of Labor? Classical Monopsony Power and Labor's Share (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:150:y:2021:i:c:s0304387821000043
Access Statistics for this article
Journal of Development Economics is currently edited by M. R. Rosenzweig
More articles in Journal of Development Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().