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Employer monopsony power in the labor market for undocumented workers

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  • Julie L. Hotchkiss
  • Myriam Quispe-Agnoli

Abstract

Using matched employer-employee data from the state of Georgia, this paper investigates the potential for employer monopsony power in the labor market for undocumented workers. We find that the labor supply elasticity of undocumented workers is about 13 percent lower than that estimated for documented workers, suggesting that at least some of the observed wage gap between documented and undocumented workers can be explained by firms' exploiting their monopsony power. There is also evidence of some displacement, with the hiring of undocumented workers being associated with a small amount of documented worker separation.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2009-14.

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Date of creation: 2009
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Handle: RePEc:fip:fedawp:2009-14

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Keywords: Labor market;

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References

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  1. Machin, Stephen & Manning, Alan, 1992. "Testing Dynamic Models of Worker Effort," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 288-305, July.
  2. Stark, Oded, 2006. "Work Effort, Moderation in Expulsion, and Illegal Migration," Discussion Papers 7127, University of Bonn, Center for Development Research (ZEF).
  3. Julie L. Hotchkiss & Robert E. Moore, 2007. "Assessing the welfare impact of the 2001 tax reform on dual-earner families," Working Paper 2007-27, Federal Reserve Bank of Atlanta.
  4. Erling Barth & Harald Dale-Olsen, 1999. "Monopsonistic Discrimination and the Gender-Wage Gap," NBER Working Papers 7197, National Bureau of Economic Research, Inc.
  5. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc.
  6. Barth, Erling & Dale-Olsen, Harald, 2009. "Monopsonistic Discrimination, Worker Turnover, and the Gender Wage Gap," IZA Discussion Papers 3930, Institute for the Study of Labor (IZA).
  7. Hirsch, Boris & Schank, Thorsten & Schnabel, Claus, 2006. "Gender Differences in Labor Supply to Monopsonistic Firms : An Empirical Analysis Using Linked Employer-Employee Data from Germany," Discussion Papers 47, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  8. J. Benjamin & P. Chinloy & G. Jud & D. Winkler, 2007. "Do Some People Work Harder than Others? Evidence from Real Estate Brokerage," The Journal of Real Estate Finance and Economics, Springer, vol. 35(1), pages 95-110, July.
  9. Kevin Lang & Michael Manove & William T. Dickens, 2005. "Racial Discrimination in Labor Markets with Posted Wage Offers," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-145, Boston University - Department of Economics.
  10. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  11. Ottaviano, Gianmarco I. P. & Peri, Giovanni, 2007. "Rethinking the effects of immigration on wages," HWWI Research Papers 3-8, Hamburg Institute of International Economics (HWWI).
  12. Raphael, Steven & Riker, David A., 1999. "Geographic Mobility, Race, and Wage Differentials," Journal of Urban Economics, Elsevier, vol. 45(1), pages 17-46, January.
  13. Francisco L. Rivera-Batiz, 1999. "Undocumented workers in the labor market: An analysis of the earnings of legal and illegal Mexican immigrants in the United States," Journal of Population Economics, Springer, vol. 12(1), pages 91-116.
  14. Brown, J. David & Hotchkiss, Julie L. & Quispe-Agnoli, Myriam, 2009. "Undocumented Worker Employment and Firm Survival," IZA Discussion Papers 3936, Institute for the Study of Labor (IZA).
  15. Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring.
  16. Julie L. Hotchkiss & Myriam Quispe-Agnoli & Fernando Rios-Avila, 2012. "The wage impact of undocumented workers," Working Paper 2012-04, Federal Reserve Bank of Atlanta.
  17. Robert J. LaLonde & Robert H. Topel, 1989. "Labor Market Adjustments to Increased Immigration," University of Chicago - George G. Stigler Center for Study of Economy and State 55, Chicago - Center for Study of Economy and State.
  18. Roberto Pedace, 2000. "Immigration, Labor Market Mobility, and the Earnings of Native-born Workers: An Occupational Segmentation Approach," Claremont Colleges Working Papers 2000-46, Claremont Colleges.
  19. Costa, Dora L, 2000. "The Wage and the Length of the Work Day: From the 1890s to 1991," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 156-81, January.
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Citations

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Cited by:
  1. Alan Manning, 2010. "Imperfect Competition in the Labour Market," CEP Discussion Papers dp0981, Centre for Economic Performance, LSE.
  2. Depew, Briggs & Norlander, Peter & Sorensen, Todd A., 2013. "Flight of the H-1B: Inter-Firm Mobility and Return Migration Patterns for Skilled Guest Workers," IZA Discussion Papers 7456, Institute for the Study of Labor (IZA).
  3. Arnaud Dupuy & Todd Sorensen, 2014. "On Input Market Frictions and Estimation of Factors' Demand," Southern Economic Journal, Southern Economic Association, vol. 80(3), pages 772-781, January.
  4. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2012. "Does employing undocumented workers give firms a competitive advantage?," Working Paper 2012-02, Federal Reserve Bank of Atlanta.
  5. Julie L. Hotchkiss & Myriam Quispe-Agnoli & Fernando Rios-Avila, 2012. "The wage impact of undocumented workers," Working Paper 2012-04, Federal Reserve Bank of Atlanta.
  6. Torberg Falch, 2013. "Wages and Recruitment: Evidence from External Wage Changes," CESifo Working Paper Series 4078, CESifo Group Munich.
  7. Depew, Briggs & Sorensen, Todd A., 2011. "Elasticity of Supply to the Firm and the Business Cycle," IZA Discussion Papers 5928, Institute for the Study of Labor (IZA).
  8. Kuhn, Peter J. & Shen, Kailing, 2014. "Do Employers Prefer Undocumented Workers? Evidence from China's Hukou System," IZA Discussion Papers 8289, Institute for the Study of Labor (IZA).

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