Labor Market Power and Development

Tristany Armangué-Jubert, Nezih Guner and Alessandro Ruggieri

No 1446, Working Papers from Barcelona School of Economics

Abstract: Imperfect competition in labor markets can lead to efficiency losses and lower aggregate output. This paper examines how variations in labor market competitiveness may account for differences in GDP per capita among countries. By structurally estimating an oligopsony model with free entry across different development stages, we find that labor market power increases with GDP per capita. Wage mark-downs vary from 54% in low-income countries to around 24% in the richest ones. If labor markets in poorer countries were as competitive as in more developed ones, their output per capita could rise by up to 45%.

Keywords: labor market power; oligopsony; development; inequality (search for similar items in EconPapers)
JEL-codes: E24 J42 L13 O11 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-com and nep-lma
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Related works:
Working Paper: Labor Market Power and Development (2023)
Working Paper: Labor Market Power and Development (2023)
Working Paper: Labor Market Power and Development (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1446

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