Infrastructure Investment and Labor Monopsony Power

Abstract

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Urban Transit Infrastructure: Spatial Mismatch and Labor Market Power

“…We contribute to this literature by quantifying responses to additional labor market integration in a city. Our findings on reduced labor market power due to transportation infrastructure expansion are consistent with those of Brooks et al (2021), who find reduced labor markdowns after an infrastructure expansion in India that may facilitate migration.…”

Labor Market Power, Self-Employment, and Development

“…Examples of policies that reduce the fixed costs of entry include interventions aimed at decreasing the monetary and non-monetary cost to set up a formal manufacturing firm, e.g., one-stop shops (Branstetter, Lima, Taylor, and Venâncio, 2014), or at reducing financial constraints of entrepreneurs (Buera, Kaboski, and Shin, 2011). Similarly, policies that increase the productivity of all firms in a market include efforts to improve market access or more stable access to electricity and other complementary inputs (Allen, 2014;Startz, 2016;Brooks, Kaboski, Kondo, Li, and Qian, 2021). Lastly, workers' ability is the target of workers' training programs aimed to increase workers' productivity and employability in the labor market, such as vocational training programs and on-the-job training (Alfonsi, Bandiera, Bassi, Burgess, Rasul, Sulaiman, and Vitali, 2020).…”

“…Using a combination of theory and data, find evidence of labor market power in the Chinese and Indian context, held by either individual firms or collusive groups of firms. Brooks, Kaboski, Kondo, Li, and Qian (2021) show that the expansion of the national highway system in India reduced labor markdowns significantly. Amodio and De Roux (2021) use plant and customs data from Colombia to generate plant-specific shocks to marginal revenue product, finding that workers produce around 40% more than their wage level.…”

“…We consider and evaluate three common types of policies promoting industrialization and manufacturing wage employment. These policies include: (i) reducing fixed entry costs for employers, for instance by streamlining regulations for business registration (e.g., one-stop shops) or reducing financial constraints of firms (Branstetter, Lima, Taylor, and Venâncio, 2014;Buera, Kaboski, and Shin, 2011); (ii) increasing productivity and connectivity of firms, e.g., by ameliorating infrastructures ot through market integration policies (Allen, 2014;Startz, 2016;Brooks, Kaboski, Kondo, Li, and Qian, 2021); (iii) improving workers' skills through vocational and on-the-job training programs (Alfonsi, Bandiera, Bassi, Burgess, Rasul, Sulaiman, and Vitali, 2020). We find that these policies have very different aggregate and distributional effects as changes in firm entry and worker sorting simultaneously affect the size of wage markdowns and the extent of labor market power.…”

Global Labor Market Power

“…Notice also that if the production function is Cobb-Douglas, one can measure differences in the wage markdown (relative to its homolog for materials) across firms within a given reference group by taking the ratio between the labor and the material shares of revenues. This is the approach that Amodio and Di Maio (2018) adopt to measure input market distortions in Palestine, later recommended by Bond et al (2021) and utilized by Brooks et al (2021a) and Estefan et al (2024). While suitable for comparing the wage markdown between firms even over time, this method is unsuitable for cross-country comparisons because the measure is relative to other firms with the same production technology such as those in the same industry and country.…”