Heterogeneous workers, trade, and migration

Oligopoly and oligopsony in international trade

“…In fact, under Bertrand competition, changes in markups and markdowns are much smaller than what predicted by Cournot competition, which is the baseline market structure of our model. Our policy recommendations are similar to those of Heiland and Kohler (2022), who recommend labour market integration along with international trade because trade alone exacerbates labour market distortions due to monopsony power. Their paper strengthens our policy claim; the authors reach the same conclusion as we do using a different model in which labour is the oligopsonistic input and workers are heterogeneous.…”

Monopsony power, offshoring, and a European minimum wage

“…Our analysis contributes to a growing literature studying the effects of international trade in models with monopsonistic labour market distortions (see MacKenzie, 2017;Holzner and Larch, 2021;Jha and Rodriguez-Lopez, 2021;Egger et al, 2022;Heiland and Kohler, 2022;Pham, 2023).…”

Migration between imperfectly competitive economies

“…It is easy to motivate our focus on imperfectly competitive bargaining in a migration context since inter‐ and intra‐national migration has been a ubiquitous and heated economic and political topic throughout history. Starting with Jerome (1926)'s implications of migration for the business cycle, economists in different eras have analysed various aspects of migration including individual motivations and determinants, selective policies and general equilibrium implications—some examples of this huge literature include Sjaastad (1962); Harris and Todaro (1970); Borjas (1987); Borjas (1991); Benhabib and Jovanovic (2012); Tombe and Zhu (2019); Tabellini (2020) and Heiland and Kohler (2022). Clemens (2011) makes a strong case that one of the greatest distortions in the global economy is the ‘tightly binding constraints on emigration from poor regions’, which are reflected in large wage gaps between rich and poor.…”

“…When the host labour union has no power (1 − b h = 0) and the source union has full power in migration bargaining (1 − b m = 1), an increase of the source union bargaining power over the source cartel is irrelevant for welfare because there is already full migration.26 In reality, endogenous capital only slowly adjusts to the long run. Migration is desirable for the source economies to increase their welfare catch-up to the host economies, so that labour mobility can be seen as a complement to capital accumulation during the adjustment process, seeHeiland and Kohler (2022).27 Two cases are close but not the same. The host monopsony and migrant monopoly case (b h = 1, b m = 0, b s = 0) produced…”

“… 26 26 In reality, endogenous capital only slowly adjusts to the long run. Migration is desirable for the source economies to increase their welfare catch‐up to the host economies, so that labour mobility can be seen as a complement to capital accumulation during the adjustment process, see Heiland and Kohler (2022). …”