Imperfect Competition, Compensating Differentials, and Rent Sharing in the US Labor Market

We quantify the importance of imperfect competition in US labor market by estimating size rents earned American firms and workers. construct a matched employer-employee panel dataset combining universe business worker tax records for period 2001–2015. Using this data, we identify estimate an equilibrium model with two-sided heterogeneity where workers view as substitutes because heterogeneous preferences over nonwage job characteristics. The allows us to draw inference about competition, sorting, compensating differentials, rent sharing. (JEL D24, H24, H25, J22, J24, J31, J42)