RT Journal Article
SR Electronic
T1 Labor Market Institutions and Wage-Setting Power
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 0925-14494R1
DO 10.3368/jhr.0925-14494R1
A1 Amodio, Francesco
A1 Brancati, Emanuele
A1 Roux, Nicolás de
A1 Maio, Michele Di
YR 2026
UL http://jhr.uwpress.org/content/early/2026/04/01/jhr.0925-14494R1.abstract
AB We measure firms’ wage-setting power in 16 Latin American and Caribbean countries. Exploiting variation in firms’ exposure to trade and exchange rates, we generate shocks to labor demand to trace out firm-level labor supply curves and quantify labor market power. We estimate an inverse labor supply elasticity of 0.82, implying that workers receive 55 cents per additional dollar produced. Wage-setting power is significantly higher among firms in countries with lower union density, limited collective bargaining, and no unemployment protection. This underscores the role of labor market institutions in shaping firms’ wagesetting power and the distribution of the gains from trade.