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
Englisch

Erschienen in
Series: Jena Economic Research Papers ; No. 2023-015

Klassifikation
Wirtschaft
Fiscal Policy
Monopsony; Segmented Labor Markets
Aggregate Factor Income Distribution
Business Fluctuations; Cycles
Thema
fiscal policy
labor-market monopsony
income inequality

Ereignis
Geistige Schöpfung
(wer)
Bredemeier, Christian
Jansen, Babette
Winkler, Roland
Ereignis
Veröffentlichung
(wer)
Friedrich Schiller University Jena, Faculty of Economics and Business Administration
(wo)
Jena
(wann)
2023

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Bredemeier, Christian
  • Jansen, Babette
  • Winkler, Roland
  • Friedrich Schiller University Jena, Faculty of Economics and Business Administration

Entstanden

  • 2023

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