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Open Access

Monopsony in Movers

The Elasticity of Labor Supply to Firm Wage Policies

Ihsaan Bassier, Arindrajit Dube and Suresh Naidu
Journal of Human Resources, April 2022, 57 (S) S50-s86; DOI: https://doi.org/10.3368/jhr.monopsony.0319-10111R1
Ihsaan Bassier
Ihsaan Bassier is at University of Massachusetts–Amherst.
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Arindrajit Dube
Arindrajit Dube is at University of Massachusetts–Amherst, NBER, and IZA.
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Suresh Naidu
Suresh Naidu is at Columbia University and NBER.
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Abstract

We estimate the impact of the firm component of hourly wage variation on separations from matched Oregon employer–employee data. We use both firm fixed effects estimated from a wage equation as well as a matched instrumental variable (IV) event study around employment transitions between firms. Separations decline with firm wage policies: the implied firm-level labor supply elasticities are around 4, consistent with recent quasi-experimental evidence, but three to four times larger than existing estimates using individual wages. We find that monopsonistic competition is pervasive, even in low-wage, high-turnover sectors, but with little heterogeneity by labor market concentration

JEL Classification:
  • J2
  • J3
  • J31
  • J42
  • Received March 2019.
  • Accepted January 2021.

This open access article is distributed under the terms of the CC-BY-NC-ND license ((http://creativecommons.org/licenses/by-nc-nd/4.0) and is freely available online at: http://jhr.uwpress.org.

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Journal of Human Resources: 57 (S)
Journal of Human Resources
Vol. 57, Issue S
1 Apr 2022
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Monopsony in Movers
Ihsaan Bassier, Arindrajit Dube, Suresh Naidu
Journal of Human Resources Apr 2022, 57 (S) S50-s86; DOI: 10.3368/jhr.monopsony.0319-10111R1

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Monopsony in Movers
Ihsaan Bassier, Arindrajit Dube, Suresh Naidu
Journal of Human Resources Apr 2022, 57 (S) S50-s86; DOI: 10.3368/jhr.monopsony.0319-10111R1
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Keywords

  • J2
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  • J42
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