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Measuring Labor Market Power in the U.S. Manufacturing Sector

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Abstract

Policymakers have recently considered several policies to mitigate a perceived increase in employers' market power. However, the lack of direct evidence on labor market power has complicated the policy debate. In this article, we show that the degree of employers' market power is substantial and widespread in the U.S. manufacturing sector. A worker in the average manufacturing plant receives only 65 cents on each dollar generated in the margin. Furthermore, we propose a novel aggregate measure for labor market power. We find that employers' market power decreased between the late 1970s and the early 2000s but has sharply increased since.

Suggested Citation

  • Chen Yeh, 2022. "Measuring Labor Market Power in the U.S. Manufacturing Sector," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 22(01), January.
    • Handle: RePEc:fip:fedreb:93812
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2022/eb_22-01
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    Keywords

    manufacturing; labor markets;

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