Infrastructure Investment and Labor Monopsony Power

In this paper, we study whether or not transportation infrastructure disrupts local monopsony power in labor markets using an expansion of the national highway system India. Using panel data on manufacturing firms, find that is reduced among firms near newly constructed highways relative to remain far from highways. We estimate reduce markdowns significantly. use changes composition inputs identify these effects separately reduction output markups occurs simultaneously. The impacts construction are therefore pro-competitive both and input act increase share income receives by 1.8–2.3 percentage points.