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Monopsony and the Wage Effects of Migration

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  • Michael Amior
  • Alan Manning

Abstract

If labour markets are competitive, migration can only affect native wages via marginal products. But under imperfect competition, migration may also increase wage mark-downs—if firms have greater monopsony power over migrants than natives, but cannot perfectly wage discriminate. While marginal products depend on relative labour supplies across skill cells, mark-downs depend on migrant concentration within them. This insight can help rationalise empirical violations of canonical migration models. Using US data, we conclude that migration does increase mark-downs: this expands aggregate native income, but redistributes it from workers to firms. Policies which constrain monopsony power over migrants can mitigate these adverse wage effects.

Suggested Citation

  • Michael Amior & Alan Manning, 2026. "Monopsony and the Wage Effects of Migration," The Economic Journal, Royal Economic Society, vol. 136(674), pages 402-439.
    • Handle: RePEc:oup:econjl:v:136:y:2026:i:674:p:402-439.
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