Monopsony in Movers: The Elasticity of Labor Supply to Firm Wage Policies

Ihsaan Bassier, Arindrajit Dube and Suresh Naidu

Journal of Human Resources, 2022, vol. 57, issue S, s50-s86

Abstract: We estimate the impact of the firm component of hourly wage variation on separations from matched Oregon employer–employee data. We use both firm fixed effects estimated from a wage equation as well as a matched instrumental variable (IV) event study around employment transitions between firms. Separations decline with firm wage policies: the implied firm-level labor supply elasticities are around 4, consistent with recent quasi-experimental evidence, but three to four times larger than existing estimates using individual wages. We find that monopsonistic competition is pervasive, even in low-wage, high-turnover sectors, but with little heterogeneity by labor market concentration.

JEL-codes: J2 J3 J31 J42 (search for similar items in EconPapers)
Date: 2022
Note: DOI: 10.3368/jhr.monopsony.0319-10111R1
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Citations: View citations in EconPapers (33)

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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:57:y:2022:i:s:p:s50-s86

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