کشش عرضه نیروی کار برای شرکت مافوق در طول چرخه کسب و کار

Recent empirical work has found evidence that the elasticity of labor supply to individual firms is finite, implying that firms may have wage setting power. However, these studies capture only single snapshots of the elasticity. We are the first to study how the elasticity of labor supply to the firm changes between economic contractions and economic expansions. We study two manufacturing firms operating in geographically distinct labor markets during the volatile inter-war period. Our analysis suggests that the elasticity of labor supply to the firm is lower during recessions than during expansions, providing evidence of differential wage setting power over the business cycle. This differential wage setting ability provides an explanation of the pro-cyclicality of real wages.

One of the most important, yet understudied, issues within the field of labor economics is the degree of wage setting power that firms possess. In a standard wage setting model, a firm's wage setting power is negatively related to the size of the elasticity of labor supply to the firm. Understanding the value of this parameter can help explain puzzling empirical findings such as the gender wage gap, the fact that low wage workers are more likely than high wage workers to search for new jobs and separate from existing employment, and the lack of evidence of large negative effects of the minimum wage on employment, among other things (Manning, 2003: p. 361).1 In this paper, we make a novel contribution by estimating the elasticity of labor supply to the firm during both expansions and contractions. Consistent with a theoretical wage posting search model, our empirical estimates find that the elasticity of labor supply to the firm is counter-cyclical. Thus, cyclicality in monopsony power provides an additional pro-cyclical component to real wages.

In a standard wage setting model, the wage is a function of a worker's marginal revenue product and the worker's elasticity of labor supply to the firm. Search models suggest that this elasticity is finite and recent empirical work supports these theoretical predictions. This relatively recent body of work stands in contrast to what has classically been assumed in the labor economics literature, and can help to explain important unanswered questions within the field. Here, we study how the elasticity of labor supply to the firm varies over the business cycle, which can help to explain the pro-cyclicality of real wages as well as jobless recoveries.