Kory Kroft (University of Toronto), "An Empirical Framework for Matching with Imperfect Competition"

Friday, May 5, 2023 15:30to17:00
Leacock Building Room 429, 855 rue Sherbrooke Ouest, Montreal, QC, H3A 2T7, CA

"An Empirical Framework for Matching with Imperfect Competition"

Kory Kroft, University of Toronto

May 5, 2023, 3:30 to 5:00 PM
Leacock 429

Host: Fernando Saltiel
Field: Applied Microeconomics

Abstract: This paper considers a static, many-to-one matching model of the labor market. We assume that firms operate in an oligopsony labor market and allow for strategic interactions in wage setting. Firms face inelastic labor supply curves and set an endogenous firm-specific markdown below marginal product. We provide a tractable characterization of the equilibrium and demonstrate existence and uniqueness. This characterization of the model equilibrium allows us to derive a rich set of comparative statics and then to gauge the relative contributions of worker skill, preference for amenities and strategic interaction on equilibrium wage inequality. We establish identification of labor demand and supply structural parameters and estimate them using matched employer-employee data on the population of Danish workers.

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