Monopsony and the wage effects of migration

Michael Amior and Alan Manning

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: If labour markets are competitive, migration can only affect native wages via marginal products. But under imperfect competition, migration may also increase wage mark-downs—if firms have greater monopsony power over migrants than natives, but cannot perfectly wage discriminate. While marginal products depend on relative labour supplies across skill cells, mark-downs depend on migrant concentration within them. This insight can help rationalise empirical violations of canonical migration models. Using US data, we conclude that migration does increase mark-downs: this expands aggregate native income, but redistributes it from workers to firms. Policies which constrain monopsony power over migrants can mitigate these adverse wage effects.

JEL-codes: J31 J42 J61 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2025-10-21
New Economics Papers: this item is included in nep-bec, nep-com and nep-ure
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Published in The Economic Journal, 21, October, 2025. ISSN: 0013-0133

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http://eprints.lse.ac.uk/128735/ Open access version. (application/pdf)

Related works:
Working Paper: Monopsony and the wage effects of migration (2020)
Working Paper: Monopsony and the wage effects of migration (2020)
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