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Monopsony and the wage effects of migration

Michael Amior and Alan Manning ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: In a generalization of the well-known "immigration surplus" result, we show immigration must always increase the average native worker's marginal product, in any long-run constant returns economy. But in a monopsonistic labor market, immigration may also affect native wages through the mark-downs imposed by firms. Using standard US census data, we reject the restrictions implied by the traditional competitive model. We find that immigration increases mark-downs, and this effect quantitatively dominates the improvements in natives' marginal products. The capture of migrants' rents significantly expands the total surplus going to natives, but redistributes income among them (from workers to firms).

Keywords: migration; wages; monopsony (search for similar items in EconPapers)
JEL-codes: J31 J42 J61 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-int and nep-mig
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