Regulating Employer Market Power
Saturday, Jan. 5, 2019 10:15 AM - 12:15 PM
- Chair: Aaron J. Sojourner, University of Minnesota
Monopsony Power in United States Labor Markets
AbstractThis paper develops a model relating aggregate wages to a traditional measure of market concentration, the Herndahl-Hirschman index (HHI). Local labor market wages and HHIs are constructed from 1980 - 2012 using U.S. administrative data covering the universe of non-farm private sector firms. Employing a rich set of controls for industry, time, and local market characteristics, the model is estimated and used to infer both the cross section and time series of monopsony power. Because of this uniquely rich data set, this paper is able to comment on all industries and occupations across the U.S. Preliminary results show monopsony power depresses wages by almost 30% when comparing competitive labor markets to single-buyer markets.
Anticompetitive Mergers in Labor Markets
AbstractMergers of competitors are conventionally challenged under the federal antitrust laws when they threaten to lessen competition in some product or service market in which the merging firms sell. Mergers can also injure competition in markets where the firms purchase, including the labor market. Recent empirical work in economics has shown that market concentration is very high in many labor markets and that higher labor market concentration is associated with lower wages. Here, we offer an empirically based legal assessment of the problem of mergers that facilitate anticompetitive wage and salary suppression. We consider the most likely problems that courts will encounter in such litigation, including market definition, assessment of market concentration, the role of non-compete and non-poaching agreements as aggravating factors for concentration, and application of the government's Merger Guidelines. Given the high level of concentration in many labor markets, a mature policy of pursuing mergers because of harmful effects in labor markets could yield many cases. Courts must be in a position to adequately deal with such cases based on the application of the existing merger review framework to the analysis of anticompetitive effects in the labor market.
Antitrust Remedies for Labor Market Power
AbstractRecent research indicates that labor market power has contributed to wage inequality and economic stagnation. Although the antitrust laws prohibit firms from restricting competition in labor markets like in product markets, the government does little to address the labor market problem and private litigation has been rare and mostly unsuccessful. The reason is that the analytic methods for evaluating labor market power in antitrust contexts are primitive, far less sophisticated than the legal rules used to judge product market power. To remedy this asymmetry, we propose methods for judging the effects of mergers on labor markets. We also extend our approach to other forms of anticompetitive practices undertaken by employers against workers. We highlight some arguments and evidence indicating that market power may be even more important in labor than in product markets.
- J4 - Particular Labor Markets