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

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Abstract

If labour markets are competitive, migration can only affect native wages via marginal products. But under imperfect competition, migration may also increase wage mark-downs—if firms have greater monopsony power over migrants than natives, but cannot perfectly wage discriminate. While marginal products depend on relative labour supplies across skill cells, mark-downs depend on migrant concentration within them. This insight can help rationalise empirical violations of canonical migration models. Using US data, we conclude that migration does increase mark-downs: this expands aggregate native income, but redistributes it from workers to firms. Policies which constrain monopsony power over migrants can mitigate 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:	28 Oct 2025 09:30
URI:	http://eprints.lse.ac.uk/id/eprint/128735

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