Arbeitspapier
Why aren't people leaving Janesville? Industry persistence, trade shocks, and mobility
This paper quantifies the extent to which the U.S. manufacturing labor market is characterized by employer market power and how such market power has changed over time. We find that the vast majority of U.S. manufacturing plants operate in a monopsonistic environment and, at least since the early 2000s, the labor market in U.S. manufacturing has become more monopsonistic. To reach this conclusion, we exploit rich administrative data for U.S. manufacturers and estimate plant-level markdowns-the ratio between a plant's marginal revenue product of labor and its wage. In a competitive labor market, markdowns would be equal to unity. Instead, we find substantial deviations from perfect competition, as markdowns average 1.53. This result implies that a worker employed at the average manufacturing plant earns 65 cents on each dollar generated on the margin. To investigate long-term trends in employer market power, we propose a novel measure for the aggregate markdown that is consistent with aggregate wedges and also incorporates the local nature of labor markets. We find that the aggregate markdown decreased between the late 1970s and the early 2000s, but has been sharply increasing since.
- Language
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Englisch
- Bibliographic citation
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Series: Upjohn Institute Working Paper ; No. 22-365
- Classification
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Wirtschaft
Labor Demand
Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: U.S.; Canada: Pre-1913
Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: U.S.; Canada: 1913-
Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: Pre-1913
Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: 1913-
Size and Spatial Distributions of Regional Economic Activity
- Subject
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Employment persistence
labor mobility
local ties
- Event
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Geistige Schöpfung
- (who)
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Ottinger, Sebastian
Poyker, Michael
- Event
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Veröffentlichung
- (who)
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W.E. Upjohn Institute for Employment Research
- (where)
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Kalamazoo, MI
- (when)
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2022
- DOI
-
doi:10.17848/wp22-365
- Handle
- Last update
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10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ottinger, Sebastian
- Poyker, Michael
- W.E. Upjohn Institute for Employment Research
Time of origin
- 2022
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