Labor Market Power / David W. Berger, Kyle F. Herkenhoff, Simon Mongey.

Format:

Book

Author/Creator:

Berger, David W.

Contributor:

National Bureau of Economic Research.

Herkenhoff, Kyle F.

Mongey, Simon.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25719.

NBER working paper series no. w25719

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

To measure labor market power in the US economy, we develop a tractable quantitative, general equilibrium, oligopsony model of the labor market. We estimate key model parameters by matching the firm-level relationship between labor market share and employment size and wage responses to state corporate tax changes. The model quantitatively replicates quasi-experimental evidence on (i) imperfect productivity-wage pass-through, (ii) strategic behavior of dominant employers, and (iii) the local labor market impact of mergers. We then measure welfare losses relative to the efficient allocation. Accounting for transition dynamics, we quantify welfare losses from labor market power relative to the efficient allocation as roughly 6 percent of lifetime consumption. An analytical decomposition attributes equal parts to dead-weight losses and misallocation. Lastly, we find that declining local concentration added 4 ppt to labor's share of income between 1977 and 2013.

Notes:

Print version record

March 2019.