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Firm Market Power and the Earnings Distribution

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  • Webber, Douglas A.

    (Federal Reserve Board of Governors)

Abstract

Using linked employer-employee data, I compute firm-level measures of the labor supply elasticity facing each private non-farm firm in the US. I provide the first direct evidence of the positive relationship between a firm's labor supply elasticity and the earnings of its workers. I also contrast the dynamic model method employed by this paper with the more traditional use of concentration ratios to measure a firm's labor market power. Finally, I construct a counterfactual earnings distribution which allows the effects of firm market power to vary across the earnings distribution.

Suggested Citation

  • Webber, Douglas A., 2013. "Firm Market Power and the Earnings Distribution," IZA Discussion Papers 7342, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp7342
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    More about this item

    Keywords

    monopsony;

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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