Economics

Monopsony in the U.S. Labor Market

C. Yeh, C. Macaluso, et al.

Discover how employer market power in the U.S. manufacturing sector has evolved over time in this insightful analysis by Chen Yeh, Claudia Macaluso, and Brad J. Hershbein. The research unveils the surprising reality of monopsonistic practices and an intriguing U-shaped trend in markdowns affecting workers' earnings.

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Playback language: English

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Abstract

This paper quantifies the extent of employer market power in the U.S. manufacturing labor market and how it has changed over time. Using rich administrative data, the authors estimate plant-level markdowns (the ratio of a plant’s marginal revenue product of labor to its wage). They find that most U.S. manufacturing plants operate monopsonistically, with markdowns averaging 1.53 (implying workers earn 65 cents per dollar generated on the margin). A novel aggregate markdown measure reveals a U-shaped trend: decreasing from the late 1970s to the early 2000s, then sharply increasing.

Publisher

Upjohn Institute Working Paper

Published On

Mar 04, 2022

Authors

Chen Yeh, Claudia Macaluso, Brad J. Hershbein

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