Measuring Labor Market Power Two Ways
AEA Papers and Proceedings
vol. 109,
May 2019
(pp. 317-21)
Abstract
We compute the "applications elasticity" as a proxy for firm-level labor supply elasticity by regressing the applications to a given job on the posted wage. The average applications elasticity in our data is 0.42. We then relate our elasticity estimates to concentration in labor markets defined by six-digit SOC occupations and commuting zone. We show a robust negative relationship between the two. Applications elasticity is near zero for all but the most densely populated labor markets, suggesting that 80 percent of the workforce works in labor markets where employers exercise significant monopsony power.Citation
Azar, José, Ioana Marinescu, and Marshall Steinbaum. 2019. "Measuring Labor Market Power Two Ways." AEA Papers and Proceedings, 109: 317-21. DOI: 10.1257/pandp.20191068Additional Materials
JEL Classification
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- J42 Monopsony; Segmented Labor Markets