Restraints clauses that prevent workers from joining (or starting) a competing firm (non-compete clauses), the disclosure of confidential information or the poaching of former co-workers or clients are traditionally justified to protect legitimate business interests (e.g. trade secrets,...

This study investigates the relationship between the urban wage premium and employer concentration using Swedish full population employer-employee data. Departing from an AKM modeling framework to distinguish worker from firm specific heterogeneity - a measure of rent-sharing - we then measure...

This study estimates and decomposes recruitment elasticity, a key measure of employer market power, across job-matching stages using data from Japan's largest job-matching intermediary. On average, recruitment elasticity is negative but not statistically significantly different from zero....

We examine employer monopsony power in the New Zealand private sector labour market. New Zealand has a small, geographically dispersed population, meaning that outside employment options for workers may be limited. However, New Zealand is generally considered to have a flexible labour market...

Labor economics often assumes that wages w are equal to the marginal revenue product of labor MRP L. However, recent literature has shown that firms' market power allows them to pay wages substantially below marginal productivity. The markdown (MRP L - w)/w is our preferred measure of firms'...

Local labour market concentration may influence firms' employment responses to minimum wages. We evaluate this hypothesis using comprehensive 1998-2007 data on China's manufacturing sector and about 1,400 hand-collected county-level minimum wages. We find that, consistently with monopsony views,...

We model monopsony on the labor market using a separable matching model a la Choo and Siow (2006). We propose a simple method that estimates 1) the multidimensional determinants of productivity and non-wage preferences separately and 2) the variance of unobserved heterogeneity on both sides of...

We document and dissect a new stylized fact about firm growth: the shift from labor to intermediate inputs. This shift occurs in input quantities, cost and output shares, and output elasticities. We establish this fact using German firm-level data and replicate it in administrative firm data...

We document and dissect a new stylized fact about firm growth: the shift from labor to intermediate inputs. This shift occurs in input quantities, cost and output shares, and output elasticities. We establish this fact using German firm-level data and replicate it in administrative firm data...

Using linked vacancy-employer-employee data from Austria, we investigate how monopsony power affects firms' posting behavior and wage negotiations. Consistent with theoretical predictions, we find that firms with greater monopsony power post lower wages and offer fewer non-wage amenities,...

The increase in the real wages of British workers over the last one hundred years is often attributed to the growth in labour productivity, but this has rarely been confirmed. In the research reported here, this ascription is confronted with annual observations on wages and productivity spanning...

Norwegian workers' job mobility decisions are related to firms' wage policies, but also depend on the national tax schedule. By utilising Norwegian population-wide administrative linked employer-employee data on workers and firms between 2010-2019, we study how the job-to-job turnover of...

The neoclassical growth model assumes fixed labor supply and competitive labor markets. Is it harmless to ignore monopsonistic power in the neoclassical growth model? The paper argues that it is not, especially if a growth model needs to be consistent with the long-run dynamics of the labor...

Participation in social groups ties members to local communities. Employers can capture these benefits as rents when geographically-specific club goods raise the cost of labor mobility. We measure ties to local clubs using the shares of households identifying with a minority religion, enrollment...

We evaluate the nationwide impact of the Washington State attorney general's 2018-2020 enforcement campaign against no-poach clauses in franchising contracts, which prohibited worker movement across locations within a chain. Implementing a staggered difference-indifferences research design using...

Why have the real (consumption) wages of U.S. workers risen since the nineteenth century? Some economists answer that increases in real wages have followed increases in labor productivity over time. In this paper, this hypothesized association is confronted with annual observations of changes in...

This paper shows that self-employment shapes labor market power in low-income countries, affecting industrial development. Using Peruvian data, we show that wage-setting power increases with concentration, but less so where self-employment is more prevalent. A general equilibrium model shows...

We develop a novel, tractable New Keynesian model where firms post wages and workers search on the job, motivated by microeconomic evidence on wage setting. Because firms set wages to avoid costly turnover, the rate that workers quit their jobs features prominently in the model's wage Phillips...

This paper examines the impact of an export market expansion created by the US-Vietnam Bilateral Trade Agreement (BTA) on competition among manufacturing firms in Vietnam's local labor markets. Using a nonparametric production function approach, we measure distortionary wedges between...

Competition in the labor market theoretically leads to higher wages, yet empirical evidence to substantiate it, particularly in developing countries, has been sparse. Our study delves into the impact of increased competition in the labor market on workers' wages using a panel dataset from...

This paper characterizes the power dynamics of firms in both product and labor markets in Lithuania between 2004 and 2018. We first show that both markets are not perfectly competitive, as both price markups and wage markdowns are far from unitary and homogeneous. Interestingly, we unveil that...

Does competition in the labor market affect wage inequality? Standard textbook monopsony models predict that lower employer labor market power reduces wage dispersion. We test this hypothesis using Social Security data from Lithuania. We first fit a two-way fixed effects model to quantify the...

We argue that the arrival of immigrants with low reservation wages can strengthen the monopsony power of firms. Firms can exploit "cheap" migrant labor by offering lower wages, though at the cost of forgoing potential native hires who demand higher wages. This monopsonistic trade-off can lead to...

We develop a procedure for adjudicating between models of firm wage-setting conduct. Using data on workers' choice sets and decisions over real jobs from a U.S. job search platform, we first estimate workers' rankings over firms' non-wage amenities. We document three key findings: 1) On average,...

Non-compete clauses (NCCs) limiting the mobility of workers have been found to be rather widespread in the US, a flexible labour market with large turnover rates and a limited coverage of collective bargaining. This paper explores the presence of such arrangements in a rigid labour market, with...

The DOJ and FTC clarify the role of labor market power ("monopsony") in the 2023 draft merger guidelines. The draft states in Guideline 11 that the structural presumption threshold applies to labor market concentration, while also suggesting that a stricter threshold may be warranted in labor...

We investigate the impact of labor market concentration on average wages and decompose it into its effects on new hires and incumbents, where incumbents are defined as individuals who were already employed in the same firm the year before. Using administrative data for France, we find that...

Workers acquire skills through formal schooling, through training provided by governments, and through training provided by firms. This chapter reviews, synthesizes, and augments the literature on the last of these, which has languished in recent years despite the sizable contribution of firm...

Refugees, and immigrants more generally, often do not have access to all jobs in the labor market. We argue that restrictions on employment opportunities help explain why immigrants have lower employment and wages than native citizens. To test this hypothesis, we leverage refugees' exogenous...

Refugees, and immigrants more generally, often do not have access to all jobs in the labor market. We argue that restrictions on employment opportunities help explain why immigrants have lower employment and wages than native citizens. To test this hypothesis, we leverage refugees' exogenous...

Faced with more favourable demand conditions, many firms raise wages. However, we show that firms with labour market power, lower productivity, and binding wage floors will absorb these positive revenue productivity shocks as excess profits instead of increasing wages or employment. Our...

This paper reveals a new determinant of wage markdowns at the firm level, namely, the product scope. Using matched employer-employee data on Danish manufacturing firms, we document a negative elasticity between wages and firm scope, which is of a similar magnitude but opposite sign as the...

This study estimates and decomposes recruitment elasticity, a key measure of employer market power, across job-matching stages using data from Japan's largest job-matching intermediary. On average, recruitment elasticity is negative but not statistically significantly different from zero....

We examine employer monopsony power in the New Zealand private sector labour market. New Zealand has a small, geographically dispersed population, meaning that outside employment options for workers may be limited. However, New Zealand is generally considered to have a flexible labour market...

This study investigates the relationship between the urban wage premium and employer concentration using Swedish full population employer-employee data. Departing from an AKM modeling framework to distinguish worker from firm specific heterogeneity - a measure of rent-sharing - we then measure...