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Monopsony Power and Guest Worker Programs

Author

Listed:
  • Gibbons, Eric M.

    (Ohio State University)

  • Greenman, Allie

    (University of Nevada, Reno)

  • Norlander, Peter

    (Loyola University)

  • Sorensen, Todd A.

    (University of California, Merced)

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.

Suggested Citation

  • Gibbons, Eric M. & Greenman, Allie & Norlander, Peter & Sorensen, Todd A., 2019. "Monopsony Power and Guest Worker Programs," IZA Discussion Papers 12096, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12096
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    Cited by:

    1. Jorge Davalos & Ekkehard Ernst, 2021. "How has labour market power evolved? Comparing labour market monopsony in Peru and the United States," Papers 2103.15183, arXiv.org.
    2. Peter Norlander, 2021. "Do guest worker programs give firms too much power?," IZA World of Labor, Institute of Labor Economics (IZA), pages 484-484, June.
    3. Anna Sokolova & Todd Sorensen, 2021. "Monopsony in Labor Markets: A Meta-Analysis," ILR Review, Cornell University, ILR School, vol. 74(1), pages 27-55, January.
    4. Alan Manning, 2021. "Monopsony in Labor Markets: A Review," ILR Review, Cornell University, ILR School, vol. 74(1), pages 3-26, January.

    More about this item

    Keywords

    migration; monopsony; market concentration; guest workers;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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