Global Labor Market Power

46 Pages Posted: 26 Feb 2024

See all articles by Francesco Amodio

Francesco Amodio

McGill University

Emanuele Brancati

Sapienza University of Rome; IZA Institute of Labor Economics; Sapienza University of Rome - Faculty of Economics

Peter Brummund

University of Alabama - Department of Economics, Finance and Legal Studies

Nicolás de Roux

Universidad de los Andes - Department of Economics

Michele Di Maio

Sapienza University of Rome

Multiple version iconThere are 2 versions of this paper

Abstract

We estimate the labor market power of over 13,000 manufacturing establishments across 82 low and middle-income countries around the world. Within local labor markets, larger and more productive firms have higher wage markdowns and pay lower wages. Labor market power across countries exhibits a mild non-linear relationship with GDP per capita, entirely driven by a strong hump-shaped relationship with the share of self-employed workers. Labor market institutions fully account for the hump shape: in countries with unemployment protection, wage markdowns increase with the share of self-employment while the opposite is true in countries without it. We explain this finding through the lens of a simple oligopsonistic labor market model with frictions. Self-employment prevalence correlates with the elasticity of labor supply to the wage paid, and labor market institutions can change the sign of this relationship.

Keywords: labor market power, self-employment, development, labor market institutions

JEL Classification: J20, J30, J42, L11

Suggested Citation

Amodio, Francesco and Brancati, Emanuele and Brummund, Peter and de Roux, Nicolás and Di Maio, Michele, Global Labor Market Power. IZA Discussion Paper No. 16823, Available at SSRN: https://ssrn.com/abstract=4737333 or http://dx.doi.org/10.2139/ssrn.4737333

Francesco Amodio (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

Emanuele Brancati

Sapienza University of Rome ( email )

via Castro del Laurenziano 9
Roma, IA Rome 00191
Italy

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Sapienza University of Rome - Faculty of Economics ( email )

Via del Castro Laurenziano 9
Rome, 00161
Italy

Peter Brummund

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

Nicolás De Roux

Universidad de los Andes - Department of Economics ( email )

Carrera 1a No. 18A-10
Bogota, AA4976
Colombia

Michele Di Maio

Sapienza University of Rome ( email )

via del Castro Laurenziano 9
Rome
Italy

HOME PAGE: http://https://sites.google.com/a/uniroma1.it/micheledimaio/home

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