Economics at your fingertips  

Exploitation of Labor? Classical Monopsony Power and Labor's Share

Wyatt Brooks (), Joseph Kaboski, Yao Li () and Wei Qian

No 25660, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How important is the exercise of classical monopsony power against labor for the level of wages and labor's share? We examine this in the context of China and India – two large, rapidly-growing developing economies. Using theory, we develop a novel screen to quantify how wages are affected by market power exerted in labor markets, either by a single firm or a group of cooperating firms. The theory guides the measurement of labor “markdowns”, i.e., the gap between wage and the value of the marginal product of labor, and the screen examines how they comove with local labor market share and the share of cooperating firms. Applying this test, we find that markdowns substantially lower the labor share: by up to 10 percentage points in China and 15 percentage points in India. This impact has fallen over time in both countries as firm concentration in these labor markets has decreased.

JEL-codes: E25 J42 O1 O15 (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-com and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19) Track citations by RSS feed

Published as Brooks, Wyatt J. & Kaboski, Joseph P. & Li, Yao Amber & Qian, Wei, 2021. "Exploitation of labor? Classical monopsony power and labor's share," Journal of Development Economics, Elsevier, vol. 150(C).

Downloads: (external link) (application/pdf)

Related works:
Journal Article: Exploitation of labor? Classical monopsony power and labor's share (2021) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

Page updated 2022-08-14
Handle: RePEc:nbr:nberwo:25660