Labor Market Power and Development

• Tristany Armangué-Jubert ^[1] ; Nezih Guner ^[2] ; Alessandro Ruggieri ^[3]
  1. [1] IDEA, UAB, BSE
  2. [2] CEMFI
  3. [3] CUNEF

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• Localización: Documentos de Trabajo ( CEMFI ), Nº. 6 (CEMFI Working Paper No. 2306 October 2023), 2023
• Idioma: inglés
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• Resumen

  • Imperfectcompetitioninlabormarketscanleadtoefficiencylossesandloweraggregateoutput. In thispaper,westudywhether differences in competitiveness of labormarketscanhelpexplain differences inGDPper capitaacrosscountries.Westructurallyestimateamodel of oligopsony with freeentry for countriesat different stagesof development andshow that the labor supply elasticity,whichdetermines theextent of firms’ labor market power, is increasingwithGDPper capita.Wagemark-downs range from55percent among low-income countries toaround23 percent among the richest.Output per capita inpoorer countrieswould increasebyup to 69 percent if their labormarketswereascompetitiveas incountriesat the topof thedevelopment ladder.