Data and Code for: Imperfect Competition, Compensating Differentials and Rent Sharing in the U.S. Labor Market

Principal Investigator(s): View help for Principal Investigator(s) Thibaut Lamadon, University of Chicago; Magne Mogstad, University of Chicago; Bradley Setzler, Pennsylvania State University

Version: View help for Version V1

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Project Description

Summary:

We quantify the importance of imperfect competition in the U.S. labor market by estimating the size of labor market rents earned by American firms andworkers. We construct a matched employer-employee panel data set by combining the universe of U.S. business and worker tax records for the period 2001-2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two-sided heterogeneity where workers view firms as imperfect substitutes because of heterogeneous preferences over non-wage job characteristics. The model allows us to draw inference about imperfect competition, worker sorting, compensating differentials, and rent sharing.

Scope of Project

Subject Terms: compensating differentials; firm effects; inequality; imperfect competition; monopsony; rent sharing; wage setting; worker sorting

JEL Classification:
      J22 Time Allocation and Labor Supply
      J23 Labor Demand
      J24 Human Capital; Skills; Occupational Choice; Labor Productivity
      J31 Wage Level and Structure; Wage Differentials
      J42 Monopsony; Segmented Labor Markets

Geographic Coverage: United States of America

Universe:

The data is constructed by linking annual U.S. Treasury business tax filings with annual worker-level filings for the years 2001-2015. Business tax returns include balance sheet and other information from Forms 1120 (C-corporations), 1120S (S-corporations), and 1065 (partnerships). Earnings data are based on taxable remuneration for labor services reported on Form W-2 for direct employees and on Form 1099 for independent contractors. Earnings include wages and salaries, bonuses, tips, exercised stock options, and other sources of income deemed taxable by the IRS. These forms are filed by the firm on behalf of the worker and provide the firm-worker link.

Data Type(s): program source code

Methodology

Data Source: Joint Statistical Research Program, Statistics of Income, Internal Revenue Service

Unit(s) of Observation: Individual-level data

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Published Versions

V1 [2021-12-16]

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