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Employer monopsony power in the labor market for undocumented workers

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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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  • Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2009. "Employer monopsony power in the labor market for undocumented workers," FRB Atlanta Working Paper 2009-14, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:2009-14
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    Cited by:

    1. Kuhn, Peter J. & Shen, Kailing, 2014. "Do Employers Prefer Undocumented Workers? Evidence from China's Hukou System," IZA Discussion Papers 8289, Institute of Labor Economics (IZA).
    2. Peter Kuhn & Kailing Shen, 2015. "Do employers prefer migrant workers? Evidence from a Chinese job board," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-31, December.
    3. Jahn, Elke & Hirsch, Boris, 2012. "Is there monopsonistic discrimination against immigrants? First evidence from linked employer employee data," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65417, Verein für Socialpolitik / German Economic Association.
    4. Depew, Briggs & Sorensen, Todd A., 2011. "Elasticity of Supply to the Firm and the Business Cycle," IZA Discussion Papers 5928, Institute of Labor Economics (IZA).
    5. 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 of Labor Economics (IZA).
    6. Ortega Francesc & Edwards Ryan & Hsin Amy, 2018. "The Economic Effects of Providing Legal Status to DREAMers," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-18, June.
    7. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2013. "Does Employing Undocumented Workers Give Firms A Competitive Advantage?," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 158-170, February.
    8. Francesco Fasani, 2015. "Understanding the Role of Immigrants’ Legal Status: Evidence from Policy Experiments," CESifo Economic Studies, CESifo Group, vol. 61(3-4), pages 722-763.
    9. Briggs Depew & Peter Norlander & Todd A. Sørensen, 2017. "Inter-firm mobility and return migration patterns of skilled guest workers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(2), pages 681-721, April.
    10. Arnaud Dupuy & Todd Sorensen, 2014. "On Input Market Frictions and Estimation of Factors' Demand," Southern Economic Journal, John Wiley & Sons, vol. 80(3), pages 772-781, January.
    11. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 11, pages 973-1041, Elsevier.
    12. Julie L. Hotchkiss & Myriam Quispe-Agnoli & Fernando Rios-Avila, 2012. "The wage impact of undocumented workers," FRB Atlanta Working Paper 2012-04, Federal Reserve Bank of Atlanta.
    13. Nolan, Brian & Richiardi, Matteo & Valenzuela, Luis, 2018. "The Drivers of Inequality in Rich Countries," MPRA Paper 89806, University Library of Munich, Germany.
    14. Francesco Fasani, 2015. "Understanding the Role of Immigrants’ Legal Status: Evidence from Policy Experiments," CESifo Economic Studies, CESifo, vol. 61(3-4), pages 722-763.
    15. John Twomey & James Monks, 2011. "Monopsony and Salary Suppression: The Case of Major League Soccer in the United States," The American Economist, Sage Publications, vol. 56(1), pages 20-28, May.
    16. Torberg Falch, 2013. "Wages and Recruitment: Evidence from External Wage Changes," CESifo Working Paper Series 4078, CESifo.
    17. Uwe Dulleck & Jonas Fooken & Yumei He, 2020. "Hukou Status and Individual-Level Labor Market Discrimination: An Experiment in China," ILR Review, Cornell University, ILR School, vol. 73(3), pages 628-649, May.
    18. Wen Ci & Feng Hou & René Morissette, 2018. "Acquisition of permanent residence by temporary foreign workers in Canada: a panel study of labour market outcomes before and after the status transition," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-24, December.

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