If labour markets are competitive, migration can only affect native wages via marginal products. But under imperfect competition, migration may also increase wage mark-downs ? if firms have greater monopsony power over migrants than natives, but cannot perfectly wage-discriminate. While marginal products depend on relative labor supplies across skill cells, mark-downs depend on migrant concentration within them. This insight can help rationalise empirical violations of canonical migration models. Using US data, we conclude that mark-downs grow: this increases aggregate native income, but redistributes it from workers to firms. Policies which constrain monopsony power over migrants can mitigate these adverse wage effects.

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8 July 2025

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The Economic Journal 136(674) , pp.402?439, 2025

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DOI: doi.org/10.1093/ej/ueaf053

https://academic.oup.com/ej/advance-article/doi/10.1093/ej/ueaf053/8193684

This Journal article is published under the centre's Community Wellbeing programme.