Labor Market Power in Developing Countries: Evidence from Colombian Plants

Francesco Amodio and Nicolás de Roux

No 14390, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: How much can employers in low and middle-income countries suppress wages below marginal productivity? Using plant and customs data from Colombia, we exploit pre- determined variation across plants in sales export destination combined with variation in exchange rates to generate plant-specific shocks to marginal revenue productivity and labor demand. We estimate a firm-level labor supply elasticity of around 2.5, implying that workers produce about 40% more than their wage level. Our results indicate that Colombian and US manufacturers have a comparable degree of labor market power.

Keywords: labor market power; export; Colombia (search for similar items in EconPapers)
JEL-codes: J42 L10 O14 O54 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2021-05
New Economics Papers: this item is included in nep-lma
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Citations: View citations in EconPapers (13)

Published - published as 'Measuring Labor Market Power in Developing Countries: Evidence from Colombian Plants' in: Journal of Labor Economics, 2024, 42 (2), 949–977

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Related works:
Working Paper: Labor Market Power in Developing Countries: Evidence from Colombian Plants (2021)
Working Paper: Labor Market Power in Developing Countries: Evidence from Colombian Plants (2021)
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