Monday 05 June 2023 12:00 - 13:30

SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

About this event

This paper proposes a novel procedure for adjudicating between models of firm wage-setting conduct. Using data from a U.S. job search platform, we first flexibly estimate labor supply to differentiated firms. We then use those estimates to formulate a test of conduct based on exclusion restrictions. On average, workers are willing to pay 12.5% of their salary to enjoy a 1-S.D. improvement in non-wage amenities. Between-worker dispersion in preferences is of a similar magnitude, indicating that preferences are not well-described by a single ranking of firms. Oligopsonistic models incorporating strategic interactions between firms and tailoring of wage offers to workers' outside options are rejected in favor of simpler monopsonistic models featuring near-uniform markdowns. Misspecification has meaningful consequences: while our preferred model predicts average markdowns of 18%, others predict average markdowns of 26% (about 50% larger). Implied patterns of between- and within-firm productivity dispersion also differ markedly across models of conduct.

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Directions

This event will take place in SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

This series is part of the CEP's Labour Markets programme.