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Employer Market Power in Silicon Valley

Matthew Gibson ()

No 14843, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Adam Smith alleged that employers sometimes secretly collude to reduce labor earnings. This paper examines an important case of such behavior: illegal no-poaching agreements through which information-technology companies agreed not to compete for each other's workers. Exploiting the plausibly exogenous timing of a US Department of Justice investigation, I estimate the effects of these agreements using a difference-in-differences design. Data from Glassdoor permit the inclusion of rich employer- and job-level controls. On average, the no-poaching agreements reduced salaries at colluding firms by 4.8 percent. Stock bonuses and ratings of job satisfaction were also negatively affected. These estimates are consistent with considerable employer market power.

Keywords: oligopsony; employer market power; labor earnings; monopsony (search for similar items in EconPapers)
JEL-codes: J31 J42 K21 K42 L41 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2021-11
New Economics Papers: this item is included in nep-com, nep-law and nep-lma
References: View references in EconPapers View complete reference list from CitEc
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