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Bidding for Talent: A Test of Conduct in a High-Wage Labor Market

Author

Listed:
  • Roussille, Nina

    (MIT)

  • Scuderi, Benjamin

    (UC Berkeley)

Abstract

We develop a procedure for adjudicating between models of firm wage-setting conduct. Using data on workers' choice sets and decisions over real jobs from a U.S. job search platform, we first estimate workers' rankings over firms' non-wage amenities. We document three key findings: 1) On average, workers are willing to accept 12.3% lower salaries for a 1-S.D. improvement in amenities. 2) Between-worker preference dispersion is equally large, indicating that preferences are not well-described by a single ranking. 3) High-paying firms have better amenities. Following the modern IO literature, we use these estimates to formulate a test of conduct based on exclusion restrictions. Oligopsonistic models incorporating strategic interactions between firms and tailoring of wage offers to workers' outside options are rejected in favor of simpler monopsonistic models featuring near-uniform markdowns. Misspecification has meaningful consequences: while our preferred model predicts average markdowns of 19.5%, others predict average markdowns as large as 26.6%.

Suggested Citation

  • Roussille, Nina & Scuderi, Benjamin, 2023. "Bidding for Talent: A Test of Conduct in a High-Wage Labor Market," IZA Discussion Papers 16352, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp16352
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    References listed on IDEAS

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    1. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
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    Cited by:

    1. Bryan S. Graham, 2024. "Sparse Network Asymptotics for Logistic Regression Under Possible Misspecification," Econometrica, Econometric Society, vol. 92(6), pages 1837-1868, November.
    2. Benjamin W. Arold & Elliott Ash & W. Bentley MacLeod & Suresh Naidu, 2025. "Worker Rights in Collective Bargaining," CESifo Working Paper Series 11766, CESifo.
    3. Brian Callaci & Matthew Gibson & Sérgio Pinto & Marshall Steinbaum & Matt Walsh, 2024. "Grads on the Go: The Effect of Franchise No-Poaching Restrictions On Worker Earnings," Upjohn Working Papers 24-405, W.E. Upjohn Institute for Employment Research.
    4. Kline, Patrick, 2024. "Firm wage effects," Handbook of Labor Economics,, Elsevier.
    5. Berger, David & Hasenzagl, Thomas & Herkenhoff, Kyle & Mongey, Simon & Posner, Eric A., 2025. "Merger guidelines for the labor market," Journal of Monetary Economics, Elsevier, vol. 153(C).
    6. Callaci, Brian & Gibson, Matthew & Pinto, Sergio & Steinbaum, Marshall & Walsh, Matt, 2023. "The Effect of Franchise No-Poaching Restrictions on Worker Earnings," IZA Discussion Papers 16330, IZA Network @ LISER.
    7. Demir, Gökay, 2024. "Labor Market Frictions and Spillover Effects from Publicly Announced Sectoral Minimum Wages," IZA Discussion Papers 17510, IZA Network @ LISER.
    8. Benjamin W. Arold & Elliott Ash & W. Bentley MacLeod & Suresh Naidu, 2025. "Worker Rights in Collective Bargaining," Cowles Foundation Discussion Papers 2468, Cowles Foundation for Research in Economics, Yale University.

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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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