Monopsony in the US Labor Market

This paper quantifies employer market power in US manufacturing and how it has changed over time. Using administrative data, we estimate plant-level markdowns—the ratio between a plant’s marginal revenue product of labor its wage. We find most plants operate monopsonistic environment, with an average markdown 1.53, implying worker earning only 65 cents on the dollar generated. To investigate long-term trends for entire sector, propose novel, theoretically grounded measure aggregate markdown. that decreased late 1970s early 2000s, but been sharply increasing since. (JEL J24, J31, J38, J42, L13, L60)