Monopsony and the wage effects of migration

Amior, Michael and Manning, Alan ORCID: 0000-0002-7884-3580 (2025) Monopsony and the wage effects of migration. The Economic Journal. ISSN 0013-0133 (In Press)

Text (monopsony_wage_effects) - Accepted Version Pending embargo until 1 January 2100. Available under License Creative Commons Attribution. Download (1MB)

Abstract

If labour markets are perfectly competitive, migration can only affect native wages by changing marginal products. But under imperfect competition, firms may also respond by imposing larger mark-downs – if they have greater monopsony power over migrants than natives, but cannot perfectly wage-discriminate between them. The marginal product effect will depend on how migration shifts relative labour supply across different skill cells, whereas the mark-down effect depends on migrant concentration within them. This insight can help account for empirical violations of canonical migration models in US data. Under imperfect competition, migration will increase aggregate native income significantly more (as firms capture rents from migrant labour). But the imposition of larger mark-downs also redistributes income from native workers to firms; and based on our estimates, native labour loses out overall. Crucially though, policies which constrain monopsony power over migrants can help eliminate these adverse wage effects.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Economics
Subjects:	J Political Science > JV Colonies and colonization. Emigration and immigration. International migration H Social Sciences > HB Economic Theory
JEL classification:	J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. J - Labor and Demographic Economics > J4 - Particular Labor Markets > J42 - Monopsony; Segmented Labor Markets J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers
Date Deposited:	09 Jul 2025 09:33
Last Modified:	09 Jul 2025 09:39
URI:	http://eprints.lse.ac.uk/id/eprint/128735

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