Labor Market Concentration Does Not Explain the Falling Labor Share

Lipsius, Ben

doi:10.2139/ssrn.3279007

Cited by 35 publications

(46 citation statements)

References 25 publications

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“…However, both indexes roughly capture the level of concentration by firm. For instance, the estimated elasticities of wages to the HHI in this paper are very similar to those in the papers by Benmelech et al (2018), Lipsius (2018), and Rinz (2018), which indicates that the HHI used here is an excellent proxy for the one that is constructed from firm-level data.…”

Section: Drawbacks Of the Measurements Of Monopsonysupporting

confidence: 82%

“…Using market concentration (HHI) as a proxy of monopsony aligns with the new research about monopsony effects in the U.S. (Azar et al, 2017;Benmelech et al, 2018;Abel et al, 2018;Lipsius, 2018;Rinz, 2018;Aznar et al, 2019). Other studies, such as those by Webber (2016) and Dube et al (2018), directly estimate the labor supply elasticity to measure monopsony.…”

Section: Measurements Of Monopsonymentioning

confidence: 81%

“…Finally, it is important to briefly mention that there has been a proliferation of new papers that focus on estimating the effect of monopsony on average wages using labor market concentration as a proxy (Azar et al, 2017;Benmelech et al, 2018;Lipsius, 2018;Rinz, 2018;and Abel et al, 2018). Moreover, other studies have calculated the firm's supply elasticity to measure the effect of monopsony (Falch, 2010;Hirsch et al 2010;Staiger et al 2010;Webber, 2016;Dube et al, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

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Minimum Wages in Monopsonistic Labor Markets

Corella

Felipe²

2020

SSRN Journal

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Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the U.S. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, very few of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this paper, I estimate the effects of the minimum wage for the U.S. under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment of-0.418 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity between of 0.05. The minimum wage has a positive insignificant effect between 0.04 and 0.29 under full monopsonistic labor markets. The results are consistent among different specifications and controlling for possible external shocks to the monopsony and omitted variables.

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Section: Drawbacks Of the Measurements Of Monopsonysupporting

confidence: 82%

Section: Measurements Of Monopsonymentioning

confidence: 81%

Section: Literature Reviewmentioning

confidence: 99%

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Minimum Wages in Monopsonistic Labor Markets

Corella

Felipe²

2020

SSRN Journal

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Section: Literature Reviewmentioning

confidence: 99%

Minimum Wages in Monopsonistic Labor Markets

Corella¹,

Felipe²

2020

Preprint

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Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the U.S. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, very few of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this paper, I estimate the effects of the minimum wage for the U.S. under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment of -0.418 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity between of 0.05. The minimum wage has a positive insignificant effect between 0.04 and 0.29 under full monopsonistic labor markets. The results are consistent among different specifications and controlling for possible external shocks to the monopsony and omitted variables.

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“…Bunting (1962, Appendix 16) finds a positive relationship between wages and concentration. A presumably incomplete list of recent papers includes: Azar, Marinescu, and Steinbaum (2017), Azar et al (2018), Benmelech, Bergman, and Kim (2018), Hershbein, Macaluso, and Yeh (2018), Lipsius (2018), Qui and Sojourner (2019), Rinz (2018), and Schubert, Stansbury, and Taska (2019).…”

Section: Wage-concentration Regressions In the Modelmentioning

confidence: 99%

Granular Search, Market Structure, and Wages

Jarosch¹,

Nimczik²,

Sorkin³

2019

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Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

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Labor Market Concentration Does Not Explain the Falling Labor Share

Cited by 35 publications

References 25 publications

Minimum Wages in Monopsonistic Labor Markets

Minimum Wages in Monopsonistic Labor Markets

Minimum Wages in Monopsonistic Labor Markets

Granular Search, Market Structure, and Wages

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