Monopsony Power and Guest Worker Programs

91 Pages Posted: 21 May 2019

See all articles by Eric Gibbons

Eric Gibbons

Ohio State University (OSU) - Marion

Allie Greenman

University of Nevada, Reno

Peter Norlander

Loyola University Chicago, Quinlan School of Business, Department of Management

Todd Sorensen

University of Nevada, Reno

Date Written: January 2019

Abstract

Guest workers on visas in the United States may be unable to quit bad employers due to barriers to mobility and a lack of labor market competition. Using H-1B, H-2A, and H-2B program data, we calculate the concentration of employers in geographically defined labor markets within occupations. We find that many guest workers face moderately or highly concentrated labor markets, based on federal merger scrutiny guidelines, and that concentration generally decreases wages. For example, moving from a market with an HHI of zero to a market comprised of two employers lowers H-1B worker wages approximately 10 percent, and a pure monopsony (one employer) reduces wages by 13 percent. A simulation shows that wages under pure monopsony could be 47 percent lower, suggesting that employers do not use the extent of their monopsony power. Enforcing wage regulations and decreasing barriers to mobility may better address issues of exploitation than antitrust scrutiny.

Keywords: guest workers, migration, monopsony, market concentration

JEL Classification: J42, F22

Suggested Citation

Gibbons, Eric and Greenman, Allie and Norlander, Peter and Sorensen, Todd, Monopsony Power and Guest Worker Programs (January 2019). IZA Discussion Paper No. 12096, Available at SSRN: https://ssrn.com/abstract=3390084 or http://dx.doi.org/10.2139/ssrn.3390084

Eric Gibbons (Contact Author)

Ohio State University (OSU) - Marion ( email )

OH
United States

Allie Greenman

University of Nevada, Reno

Peter Norlander

Loyola University Chicago, Quinlan School of Business, Department of Management ( email )

16 East Pearson St
Suite 713
Chicago, IL 60611
United States
312-915-6615 (Phone)

HOME PAGE: http://https://www.luc.edu/quinlan/faculty/peternorlander.shtml

Todd Sorensen

University of Nevada, Reno

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