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Monopsony power in the United States: Evidence from the great depression

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  • Holt, Andrew Chase

Abstract

This paper presents evidence that firms had labor market power during the early 1930s. Using plant-level data from the Census of Manufactures between 1929 and 1935, I construct a Herfindahl-Hirschman Index of local labor market concentration at the State-Economic-Area-by-industry-by-occupation level. I find that local labor market concentration has a negative relationship with wages which is consistent with labor market monopsony power. The results are robust to excluding local labor markets with one firm, excluding industries with local product markets, as well as the inclusion of industry characteristic, SEA, and occupational time trends. I find evidence that New Deal minimum wage policies weakened monopsony power. I also find suggestive evidence that high unemployment rates during 1930 reduced workers’ bargaining power.

Suggested Citation

  • Holt, Andrew Chase, 2024. "Monopsony power in the United States: Evidence from the great depression," Explorations in Economic History, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:exehis:v:92:y:2024:i:c:s0014498323000645
    DOI: 10.1016/j.eeh.2023.101570
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    More about this item

    Keywords

    Monopsony; Labor markets; Great Depression; New Deal;
    All these keywords.

    JEL classification:

    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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