Monopsony in the U.S. Labor Market
Upjohn Author ORCID Identifier
American Economic Review 112(7): 2099-2138
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.
American Economic Association
Upjohn project #44000
LABOR MARKET ISSUES; Wages, health insurance and other benefits
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