Labor Monopsony, Firms, and Demographic Gaps
Paper Session
Saturday, Jan. 4, 2025 10:15 AM - 12:15 PM (PST)
- Chair: Todd Sorensen, University of California-Merced
Monopsony in Academia and the Gender Pay Gap: Evidence from California
Abstract
We investigate monopsony power in a highly-skilled labor market given by tenure-ranked faculty in the University of California system, and analyze differential
monopsony power exposure by gender. We infer the campus-level labor supply
elasticity by estimating the elasticity of separations utilizing individual-level faculty
data and two instruments based on campus revenues and salary scales. We find that
the exploitation rate, a common measure of monopsony power, is 7% for
tenure-ranked faculty. There is a statistically significant difference in the monopsony
power experienced by male and female faculty, but it appears to account for a
relatively small percentage of the observed gender pay gap.
The Power to Discriminate
Abstract
To what extent do the dynamics of power in labor markets drive employerdiscrimination and subsequently shape inequality and opportunity in society? We
provide the first empirical evidence in the literature on the relationship between a
firm's power over labor supply and its propensity to engage in employer
discrimination. To do so, we combine rich employer-employee matched data with
quasi-random variation in job search caused by involuntary job displacement
episodes. These episodes occur often, are outside the control of workers, affect a large
share of the labor force, and induce substantial job search incentives. By exploiting
the longitudinal nature of our administrative data, we compare workers who had the
same employment history and earnings and were laid off from the same occupation
and firm at the same time, but who differ in terms of their gender and immigrant
status. Employment and earnings gaps between groups after displacement allow us to
recover employer discrimination among equally productive workers with the same
employment signals, and effect heterogeneity across differentially concentrated
markets enable us to disentangle the role of labor market power in explaining these
results. By leveraging insights from Bohrer et al. (2019) and exploiting the dynamic
adjustment path over time after the displacement events, we also provide direct and
novel evidence on the nature of the employer discrimination that we identify in the
labor market whether it is driven by preferences or beliefs. In terms of results, we
show that there is substantial employment discrimination in the Norwegian labor market, and that this is almost exclusively driven by firms who possess monopolistic power over labor supply. We further show that the source of the employment discrimination we identify is belief based, and that very little of the employment and earnings gap is coming from taste-based preferences against women and immigrants.
Labor Market Power in the U.S. Food Retailing Industry
Abstract
I study the extent and evolution of labor market power in the US food retailing sector by estimating the wedge between workers' marginal productivity and wage. Using data on a near universe of publicly trading American food retailers for the period 2004-2022, I first examine how concentration in labor markets moderates effects of state minimum wages on individual store's employment. On two proxies of labor market concentration---population density and number of establishments---I find that highly concentrated markets have more positive employment effects from minimum wages. Based on this model-free result, I hypothesize that labor oligopsony power enables food retailers in concentrated markets to maintain greater productivity-wage gaps, allowing them to absorb minimum wage increases by sacrificing some surplus while still expanding employment. To test this hypothesis, I implement a production function estimation strategy from IO literature which lets me estimate the labor markdowns or wage-productivity gaps, and understand how they differ by concentration levels. I then examine how these markdown estimates vary across years and along worker, firm, and market characteristics.Discussant(s)
Jason Sockin
,
Institute of Labor Economics
Julia Li Zhu
,
San Diego State University
JEL Classifications
- J4 - Particular Labor Markets