Title

Monopsony in the U.S. Labor Market

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-2534-8164

Publication Date

6-29-2022

Source

American Economic Review 112(7): 2099-2138

Abstract

This paper quantifies employer market power in US manufacturing and how it has changed over time. Using administrative data, we estimate plant-level markdowns—the ratio between a plant's marginal revenue product of labor and its wage. We find most manufacturing plants operate in a monopsonistic environment, with an average markdown of 1.53, implying a worker earning only 65 cents on the marginal dollar generated. To investigate long-term trends for the entire sector, we propose a novel, theoretically grounded measure for the aggregate markdown. We find that it decreased between the late 1970s and the early 2000s, but has been sharply increasing since.

DOI

10.1257/aer.20200025

Publisher

American Economic Association

Note

Upjohn project #44000

Subject Areas

LABOR MARKET ISSUES; Wages, health insurance and other benefits

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Citation

Yeh, Chen, Claudia Macaluso, and Brad J. Hershbein. 2022. "Monopsony in the U.S. Labor Market." American Economic Review 112(7): 2099-2138. https://doi.org/10.1257/aer.20200025