Code for: "Monopsony in the U.S. Labor Market"

Principal Investigator(s): View help for Principal Investigator(s) Chen Yeh, Federal Reserve Bank of Richmond; Claudia Macaluso, Federal Reserve Bank of Richmond; Brad Hershbein, W. E. Upjohn Institute

Version: View help for Version V1

Name	File Type	Size	Last Modified
Baseline			11/18/2022 11:47:AM
Online-Appendix			11/18/2022 11:49:AM
README.txt	text/plain	14.5 KB	11/17/2022 04:54:PM
monopsony_master_clean.do	text/plain	3.7 KB	11/18/2022 06:49:AM

Project Citation:

Yeh, Chen, Macaluso, Claudia, and Hershbein, Brad. Code for: “Monopsony in the U.S. Labor Market.” Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-11-28. https://doi.org/10.3886/E162581V1

Project Description

Summary:

This paper quantifies employer market power in U.S. 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.

Scope of Project

Subject Terms: monopsony; markdowns; production function estimation; wages; secular trends; Census data

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      J20 Demand and Supply of Labor: General
      J31 Wage Level and Structure; Wage Differentials
      J42 Monopsony; Segmented Labor Markets

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Published Versions

V1 [2022-11-28]

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