Monopsony in Labor Markets: A Review

Manning, Alan

doi:10.1177/0019793920922499

Cited by 191 publications

(109 citation statements)

References 90 publications

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“…4 Our paper is most closely related to Breza, Kaur, and Shamdasani (2018), who randomly vary wage increases across work sites in India and find strong evidence that wage inequality causes reductions in attendance and productivity. Our results also 2 See Fehr and Schmidt (1999) on aversion to disadvantageous inequity as a notion of fairness. 3 The standard learning model posits that having peers with higher pay sends a positive signal about future wage growth.…”

supporting

confidence: 66%

“…Because raises in our setting generally cause wages to vary relative both to the market and to one's peers, the partial derivatives in equation (3) are not directly estimable. However, they can be recovered from the estimates of the derivatives in equation (2). First, the relative-pay effect is identified as the negative of the peer-wage effect: − ∂ S(w, w p )/∂ w p .…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…This asymmetry suggests workers are averse to unequal treatment that is to their disadvantage, and we interpret this aversion to disadvantageous inequity as evidence of concerns about fairness. 2 An alternate theory of peer-wage effects that does not rely on other-regarding preferences is that workers use peer wages to help predict their own future pay. 3 However, the peer-wage response in our setting cannot be easily explained by such rational learning.…”

mentioning

confidence: 99%

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Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior

Dubé¹,

Giuliano²,

Leonard

2019

American Economic Review

123

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We analyze how separations responded to arbitrary differences in own and peer wages at a large US retailer. Regression-discontinuity estimates imply large causal effects of own-wages on separations, and on quits in particular. However, this own-wage response could reflect comparisons either to market wages or to peer wages. Estimates using peer-wage discontinuities show large peer-wage effects and imply the own-wage separation response mostly reflects peer comparisons. The peer effect is driven by comparisons with higher-paid peers-suggesting concerns about fairness. Separations appear fairly insensitive when raises are similar across peers-suggesting search frictions and monopsony are relevant in this low-wage sector. (JEL D63, J31, J42, J62, L81)When making decisions about job mobility, do workers mainly compare their pay with the outside market? Or do they also make comparisons with the pay of coworkers in their own firm? If workers are very sensitive to wage differences across firms as in the standard competitive labor-market model, then employers have little scope to set wages. But even if a firm's wage-setting is not fully constrained by market competition, employers could still be constrained by employee concerns about relative pay within the firm. Such internal constraints could lead to wage compression or to measures that inhibit comparisons across coworkers-such as pay secrecy and outsourcing of jobs. Estimates of how employee turnover responds to external and internal wage comparisons are therefore central to understanding the wage-setting behavior and other employment practices of firms. Yet the endogeneity of wages in natural employment settings has made causal evidence hard to establish.In this paper, we analyze how job separations responded to arbitrary wage differences among sales employees at a large US retailer with hundreds of stores nationwide (henceforth "the firm"). Using quasi-experimental variation that resulted from a

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supporting

confidence: 66%

Section: Theoretical Frameworkmentioning

confidence: 99%

mentioning

confidence: 99%

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Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior

Dubé¹,

Giuliano²,

Leonard

2019

American Economic Review

123

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“…Examples of models in this class include Melitz (2003), Asplund and Nocke (2006), Melitz andOttaviano (2008), andFoster, Haltiwanger, andSyverson (2008). 4 In such models, actual market entrants come from a pool of potential entrants who decide whether to pay a sunk entry cost to draw a cost level from a known distribution. Entrants who choose to receive a draw determine after observing the draw whether to begin production and thus to earn the corresponding operating profits.…”

Section: Market Power Markups and Concentrationmentioning

confidence: 99%

“…Specifically, under this framework, one can show that the share-weighted sum of firms' Lerner indexestheir price-minus-marginal-cost margin as a share of the price-equals the Herfindahl-Hirschman index divided by the price elasticity of demand. In this issue, Berry, Gaynor, and Scott Morton offer additional discussion of interpreting the connections between competition and the Herfindahl-Hirschman index in the Cournot model 4. Versions of these types of models where the differentiation is instead in product quality are often isomorphic to the heterogeneous-cost version.…”

mentioning

confidence: 99%

Macroeconomics and Market Power: Context, Implications, and Open Questions

Syverson

2019

Journal of Economic Perspectives

269

117

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This article assesses several aspects of recent macroeconomic market power research. These include the ways market power is defined and measured; the use of accounting data to estimate markups; the quantitative implications of theoretical connections among markups, prices, costs, scale elasticities, and profits; and conflicting evidence on whether greater market power has led to lower investment rates and a lower labor share of income. Throughout this discussion, I characterize the congruencies and incongruencies between macro evidence and micro views of market power and, when they do not perfectly overlap, explain the open questions that need to be answered to make the connection complete.

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The impact of right‐to‐work laws on long hours and work schedules

Gihleb,

Giuntella,

Tan

2024

J Policy Anal Manage

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Unions play a crucial role in determining wages and employment outcomes. However, union bargaining power may also have important effects on non‐pecuniary working conditions. We study the effects of right‐to‐work laws, which removed agency shop protection and weakened union powers on long hours and non‐standard work schedules that may adversely affect workers’ health and safety. We exploit variation in the timing of enactment across U.S. states and compare workers in bordering counties across adopting states and states that did not adopt the laws yet. Using the stacked approach to difference‐in‐differences estimates proposed by Cengiz et al. (2019), we find evidence that right‐to‐work laws increased the share of workers working long hours by 6%, while there is little evidence of an impact on hourly wages. The effects on long hours are larger in more unionized sectors (i.e., construction, manufacturing, and transportation). While the likelihood of working non‐standard hours increases for particular sectors (education and public administration), there is no evidence of a significant increase in the overall sample.

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Monopsony in Labor Markets: A Review

Cited by 191 publications

References 90 publications

Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior

Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior

Macroeconomics and Market Power: Context, Implications, and Open Questions

The impact of right‐to‐work laws on long hours and work schedules

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