Multinationals, Monopsony, and Local Development: Evidence From the United Fruit Company

Abstract

This paper studies the role of private sector companies in the development of local amenities. We use evidence from one of the largest multinationals of the 20th century: the United Fruit Company (UFCo). The firm was given a large land concession in Costa Rica—one of the so‐called “Banana Republics”—from 1899 to 1984. Using administrative census data with census‐block geo‐references from 1973 to 2011, we implement a geographic regression discontinuity design that exploits a land assignment that is orthogonal to our outcomes of interest. We find that the firm had a positive and persistent effect on living standards. Company documents explain that a key concern at the time was to attract and maintain a sizable workforce, which induced the firm to invest heavily in local amenities—like the development of education and health infrastructure—that can account for our result. Consistent with this mechanism, we show, empirically and through a proposed model, that the firm's investment efforts increase with worker mobility.

Global Labor Market Power

“…A large amount of new research has sparked new interest over labor market power in the US and other high-income countries, but evidence on these issues in the rest of the world is scant and fragmented. Existing studies focus on Brazil (Felix, 2022), China (Pham, 2023Brooks et al, 2021b), Colombia de Roux, 2022), Costa Rica (Méndez-Chacón andVan Patten, 2022;Alfaro-Ureña, Manelici and Vasquez, 2021), India (MacKenzie, 2021;Brooks et al, 2021b;Muralidharan, Niehaus and Sukhtankar, 2023), Indonesia (Brummund and Makowsky, 2023), Mexico (Estefan et al, 2024), Peru (Amodio, Medina and Morlacco, 2022), and South Africa (Bassier, 2023), all using different data and methodologies and thus not directly comparable to each other. 1 The fundamental contribution of this paper is that we leverage a global dataset of establishments and implement a consistent methodology to estimate the labor market power of firms across 82 countries.…”

Global Labor Market Power

“…A large amount of new research has sparked new interest over labor market power in the US and other high-income countries, but evidence on these issues in the rest of the world is scant and fragmented. Existing studies focus on Brazil (Felix, 2022), China (Pham, 2023Brooks et al, 2021b), Colombia de Roux, 2022), Costa Rica (Méndez-Chacón andVan Patten, 2022;Alfaro-Ureña, Manelici and Vasquez, 2021), India (MacKenzie, 2021;Brooks et al, 2021b;Muralidharan, Niehaus and Sukhtankar, 2023), Indonesia (Brummund and Makowsky, 2023), Mexico (Estefan et al, 2024), Peru (Amodio, Medina and Morlacco, 2022), and South Africa (Bassier, 2023), all using different data and methodologies and thus not directly comparable to each other. 1 The fundamental contribution of this paper is that we leverage a global dataset of establishments and implement a consistent methodology to estimate the labor market power of firms across 82 countries.…”

Attached once, attached forever: The persistent effects of concertaje in Ecuador

“…Moreover, I also show that the distribution of huasipungo workers in 1959 strongly correlates with concertaje in 1800. Indeed, the historical relevance of this institution was such that, unsurprisingly, Jorge Icaza's book, Huasipungo (1934), is perhaps the most worldwide famous Ecuadorean novel.10 Instead,Méndez and Van Patten (2022) show that, in Costa Rica, whenever the United Fruit Company faced additional competition, it invested more in schooling and health care to retain workers.…”