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Policy Brief: Employer Market Power in Silicon Valley

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  • Gibson, Matthew

    (Williams College)

Abstract

Adam Smith alleged that secret employer collusion to reduce labor earnings is common. This paper examines an important case of such behavior: no-poach agreements through which technology companies agreed not to compete for each other's workers. Exploiting the plausibly random timing of a US Department of Justice investigation, I estimate that these agreements cost affected workers approximately 5 percent of annual salary. Stock bonuses and ratings of job satisfaction were also negatively affected.

Suggested Citation

  • Gibson, Matthew, 2021. "Policy Brief: Employer Market Power in Silicon Valley," IZA Policy Papers 182, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izapps:pp182
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    File URL: https://docs.iza.org/pp182.pdf
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    References listed on IDEAS

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    1. Azar, José & Marinescu, Ioana & Steinbaum, Marshall & Taska, Bledi, 2020. "Concentration in US labor markets: Evidence from online vacancy data," Labour Economics, Elsevier, vol. 66(C).
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    Cited by:

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    2. Bassanini, Andrea & Batut, Cyprien & Caroli, Eve, 2023. "Labor Market Concentration and Wages: Incumbents versus New Hires," Labour Economics, Elsevier, vol. 81(C).
    3. Timothy Perri Perri, 2023. "The Death of Labor Market Competition Has Been Greatly Exaggerated," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 38(Summer 20), pages 39-54.
    4. Susan Athey & Mark Chicu & Malika Krishna & Ioana Marinescu, 2023. "The Year in Review: Economics at the Antitrust Division, 2022–2023," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 63(4), pages 525-544, December.

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    More about this item

    Keywords

    monopsony; oligopsony; employer market power; labor earnings;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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