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Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates

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  • Suresh Naidu
  • Yaw Nyarko
  • Shing-Yi Wang

Abstract

By exploiting a reform in the United Arab Emirates that relaxed restrictions on employer transitions, we provide new estimates of the monopsony power of firms over migrant workers. Our results show that the reform increased incumbent migrants' earnings and firm retention. This occurs despite an increase in employer transitions and is driven by a fall in country exits. While the outcomes of incumbents improved, the reform decreased demand for new migrants and lowered their earnings. These results are consistent with a model of monopsony in which firms face upward-sloping labor supply curves for both new recruits in source countries and incumbent migrants.

Suggested Citation

  • Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2016. "Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1735-1792.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/688877
    DOI: 10.1086/688877
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