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Monopsony in labor markets: Empirical evidence from Italian firms

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  • Filippo Passerini

    (Catholic University of Milan)

Abstract

I leverage on a matched employer-employee database drawn by an INPS archive representative of the universe of Italian private sector workers to investigate how labor market concentration affects wages and employment. I compute concentration measures relying on new hires, finding that LMs aren’t on average concentrated, despite showing relevant heterogeneity. I then investigate the relationship between concentration and wages and employment, finding negative correlations. I then develop an IV strategy based on M&As to explore whether mergers increase concentration at a market-level and to find a reliable source of variation to identify their effect. First-stage estimates indicate that only mergers raise concentration significantly, while other events don’t. Estimated elasticities with different IVs range between -0.09 and -0.14 p.p for wages and between -0.68 and -0.77 p.p for hires.

Suggested Citation

  • Filippo Passerini, 2022. "Monopsony in labor markets: Empirical evidence from Italian firms," French Stata Users' Group Meetings 2022 24, Stata Users Group.
    • Handle: RePEc:boc:fsug22:24
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    References listed on IDEAS

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