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Firm Market Power, Worker Mobility, and Wages in the US Labor Market

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  • Sadhika Bagga

Abstract

Worker mobility and wages have declined in the United States amid rising employer market power. I propose a theory of the labor market in which a decrease in employer competition, characterized by fewer firms per worker, drives the decline in worker mobility and wages. A finite and decreasing number of employers exert market power by excluding their offers from the outside options of their employees. This reduces the value of workers’ outside options and, consequently, their wages and transitions across employers. I quantify the model to explain the long-run decline in worker mobility and wages and examine its cross-sectional implications.

Suggested Citation

  • Sadhika Bagga, 2023. "Firm Market Power, Worker Mobility, and Wages in the US Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 41(S1), pages 205-256.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/726819
    DOI: 10.1086/726819
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    Cited by:

    1. Jose Garcia-Louzao & Alessandro Ruggieri, 2023. "Labor Market Competition and Inequality," CESifo Working Paper Series 10829, CESifo.
    2. Dalmazzo, Alberto & Leombruni, Roberto & Razzolini, Tiziano, 2023. "Anticipation Effects of EU Accession on Immigrants' Labour Market Outcomes," IZA Discussion Papers 16614, Institute of Labor Economics (IZA).

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