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  3. 2022
  4. Preliminary Program
  5. Monopsony in the Labor Market
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Monopsony in the Labor Market

Paper Session

Friday, Jan. 7, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: American Economic Association
  • Chair: Patrick Kline, University of California-Berkeley

Power and Dignity In the Low-Wage Labor Market: Theory and Evidence from Wal-Mart Workers

Arindrajit Dube
,
University of Massachusetts-Amherst
Suresh Naidu
,
Columbia University
Adam Dalton Reich
,
Columbia University

Abstract

What is the value of workplace dignity to low-wage workers, and is it supplied efficiently? We present a methodology to elicit valuations of difficult-to-measure job characteristics under imperfect competition, and use it to measure the value of workplace dignity to workers and its relationship to wages. We draw on extensive ethnographic work conducted with 87 Wal-Mart workers to design and implement a survey experiment with over 10,000 Wal-Mart workers recruited online. We first validate our experimental design by showing that our hypothetical quit elasticities are close to other estimates in the literature, and that subjects’ behavior (their likelihood of clicking on an outside job link) is consistent with their stated preferences and together imply a non-trivial degree of monopsony power. Next, we estimate workers’ valuations of different workplace amenities, from commuting and scheduling to more subjective measures of workplace dignity, including supervisor respect and self-expression at work. We find that workers value workplace dignity at approximately six percent of their current wage, making it comparable to amenities like commute time and more valuable than widely discussed amenities like control over one’s schedule. We find that workers’ experience of dignity at work is higher for white, older, and Southern workers, and is correlated with a measure of job rents. High dignity jobs are also associated with a lower quit elasticity, but a higher bargaining elasticity, with no such heterogeneity by the non-dignity job amenity values. Third, we use geographic variation in the bite of Walmart’s 2014 voluntary minimum wage policy to estimate the causal impact of higher wages on changes in dignity. Contrary to the theory of compensating differentials, we find that workplace dignity not a substitute for wages, as reported dignity values do not decrease among those workers likely to have experienced a raise due to the voluntary minimum wage.

Experimental Evidence on Male and Female Labor Supply

Sydnee Caldwell
,
University of California-Berkeley
Emily Oehlsen
,
University of Oxford

Abstract

We use field experiments to study labor supply to the market and the firm. Market-level Frisch elasticities govern how labor supply and therefore output responds to temporary shocks in productivity. Firm substitution elasticities determine wage markdowns and wage gaps in markets with frictions. We find that women are twice as elastic as men to the market, increasing hours worked by eight percent in response to a ten percent wage increase. This is true even among high hours individuals. However, we find no evidence that women are less likely to switch between firms in response to changes in relative wages. Our results suggest that in environments without differences in firm location or amenities, firms have little incentive to pay equally productive women lower wages.

Perpetuating Wage Inequality: Evidence from Salary History Bans

James Bessen
,
Boston University
Erich Denk
,
Boston University
Chen Meng
,
Boston University

Abstract

Pay gaps for women and minorities have persisted after accounting for observable differences. Why? If employers can access applicants’ salary histories while bargaining over wages, they can take advantage of past inequities, perpetuating inequality. Recently, a dozen US states have banned employer access to salary histories. We analyze the effects of these salary history bans (SHBs) on employer wage posting and pay in a difference-in-differences design. Following SHBs, employers posted wages more often and increased pay for job changers, particularly for women (6.4%) and non-whites (7.7%). Bargaining behavior appears to account for much of the persistence of residual wage gaps.

Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling

Wiljan van den Berge
,
Utrecht University
Alan Manning
,
London School of Economics
Maarten Goos
,
Utrecht University
Anna Salomons
,
Utrecht University
Bas Scheer
,
CPB Netherlands Bureau for Economic Policy Analysis

Abstract

The rising incidence of alternative work arrangements raises questions about worker outcomes in non-standard labor contracts. We study this question in the Netherlands, a country which has seen a rapid rise in flexible labor contracts, using administrative employer-employee data over 2006--2019. To identify the impact of alternative work arrangements, we exploit a legal work arrangement called ``payrolling'', whereby workers hired by one firm can be put on the payroll of another firm while continuing their job duties at the original firm. We find that workers on payrolling contracts experience worsening labor market outcomes compared to a matched control group following their switch to a payrolling contract, including lower hourly wages, lower hours worked, and lower pension contributions. This suggests alternative work arrangements reduce employment protection and job quality for workers.

Discussant(s)
Ioana Marinescu
,
University of Pennsylvania
Ellora Derenoncourt
,
Princeton University
Kory Kroft
,
University of Toronto
Emilie Rademakers
,
Utrecht University
JEL Classifications
  • J2 - Demand and Supply of Labor
  • J3 - Wages, Compensation, and Labor Costs