Published:
Cambridge, Mass: National Bureau of Economic Research, 2019
Published in:NBER working paper series ; no. w25719
Extent:
1 Online-Ressource; illustrations (black and white)
Language:
English
DOI:
10.3386/w25719
Identifier:
Reproduction note:
Hardcopy version available to institutional subscribers
Origination:
Footnote:
System requirements: Adobe [Acrobat] Reader required for PDF files
Mode of access: World Wide Web
Description:
We develop a tractable quantitative, general equilibrium, oligopsony model of the labor market that we use to measure the macroeconomic implications of labor market power. Strategic interaction complicates inference of parameters that are key to this exercise. To address this challenge, we contribute estimates of market share dependent wage and employment responses to state corporate tax changes in U.S. Census data, which we combine with the structure of the model. We validate against the distribution of local labor market concentration and quasi-experimental evidence on productivity-wage pass-through. Relative to a counterfactual competitive economy, and accounting for transition dynamics, we measure welfare losses from labor market power to be roughly 5 percent of lifetime consumption. Minimum wage and merger experiments caution that concentration and welfare may not negatively comove