TY - JOUR
T1 - Imperfect Competition, Compensating Differentials, and Rent Sharing in the US Labor Market
AU - Lamadon, Thibaut
AU - Mogstad, Magne
AU - Setzler, Bradley
N1 - Funding Information:
*Lamadon: Department of Economics, University of Chicago (email: lamadon@uchicago.edu); Mogstad: Department of Economics, University of Chicago, Statistics Norway, NBER, IFS (email: magne.mogstad@gmail. com); Setzler: Department of Economics, Pennsylvania State University (email: bradley.setzler@gmail.com). Thomas Lemieux was the coeditor for this article. Mogstad and Setzler acknowledge financial support from NSF Grant SES-1851808, the Washington Center for Equitable Growth, and the Norwegian Research Council. The findings and conclusions expressed are solely those of the authors and do not represent the views of the US Treasury, IRS, any agency of the Federal Government, or the NBER. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper. We are grateful to Raj Chetty, Nathan Hendren, Danny Yagan, and Owen Zidar for help and guidance in using the IRS data. We are particularly thankful to Neele Balke for her extensive feedback. We also appreciate the constructive comments and suggestions from three anonymous referees, Stephane Bonhomme, Derek Neal, and discussants and participants at various conferences and seminars.
Publisher Copyright:
© 2022 American Economic Association. All rights reserved.
PY - 2022/1/1
Y1 - 2022/1/1
N2 - We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employeremployee panel dataset by combining the universe of US business and worker tax records for the period 2001- 2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two- sided heterogeneity where workers view firms as imperfect substitutes because of heterogeneous preferences over nonwage job characteristics. The model allows us to draw inference about imperfect competition, worker sorting, compensating differentials, and rent sharing.
AB - We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employeremployee panel dataset by combining the universe of US business and worker tax records for the period 2001- 2015. Using this panel data, we identify and estimate an equilibrium model of the labor market with two- sided heterogeneity where workers view firms as imperfect substitutes because of heterogeneous preferences over nonwage job characteristics. The model allows us to draw inference about imperfect competition, worker sorting, compensating differentials, and rent sharing.
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U2 - 10.1257/aer.20190790
DO - 10.1257/aer.20190790
M3 - Article
AN - SCOPUS:85123452602
SN - 0002-8282
VL - 112
SP - 169
EP - 212
JO - American Economic Review
JF - American Economic Review
IS - 1
ER -