Arbeitspapier
Labor market power and the effects of fiscal policy
We propose a new fiscal transmission channel based on countercyclical monopsony power in the labor market. We develop a Two-Agent New Keynesian model incorporating a time-varying degree of monopsony power, with workers valuing various job aspects and firms having wage-setting power, inversely related to the elasticity of labor supply to individual firms. As government spending increases, labor supply to individual firms becomes more elastic, creating more competition, larger fiscal multipliers, and stronger distributional consequences. We examine this channel's interactions with other fiscal transmission channels. Finally, we confirm empirically the model's prediction of reduced employer market power following government spending expansions.
- Sprache
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Englisch
- Erschienen in
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Series: Jena Economic Research Papers ; No. 2023-015
- Klassifikation
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Wirtschaft
Fiscal Policy
Monopsony; Segmented Labor Markets
Aggregate Factor Income Distribution
Business Fluctuations; Cycles
- Thema
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fiscal policy
labor-market monopsony
income inequality
- Ereignis
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Geistige Schöpfung
- (wer)
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Bredemeier, Christian
Jansen, Babette
Winkler, Roland
- Ereignis
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Veröffentlichung
- (wer)
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Friedrich Schiller University Jena, Faculty of Economics and Business Administration
- (wo)
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Jena
- (wann)
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2023
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Bredemeier, Christian
- Jansen, Babette
- Winkler, Roland
- Friedrich Schiller University Jena, Faculty of Economics and Business Administration
Entstanden
- 2023