Template-Type: ReDIF-Paper 1.0
Title: Union and Firm Labor Market Power
Author-Name: Miren Azkarate-Askasua
Author-Email: azkarate-askasua@uni-bonn.de
Author-Name: Miguel Zerecero
Author-Email: mzerecer@uci.edu 
Classification-JEL: J2, J42, J51
Keywords:  Labor markets, Wage setting, Misallocation, Monopsony, Unions

Abstract: Can union and firm market power counteract each other? What are the output and welfare effects of employer 
and union labor market power? Using data from French manufacturing firms, we leverage mass layoff
shocks to competitors to identify a negative effect of employment concentration on wages. In line with the
reduced form evidence and the French institutional setting, we develop and estimate a multi-sector bargaining 
model that incorporates employer market power. We find that in the absence of unions output decreases
by 0.48 percent because they partially counteract distortions coming from oligopsony power. Furthermore,
eliminating employer and union labor market power increases output by 1.6 percent and the labor share by
21 percentage points. Workers’ geographic mobility is key to realizing the output gains.


Note: 
Length: 92
Creation-Date: 2023-11
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp475
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2023_475