بازار کار رقابت انحصاری: اثر عدم تحرک کارگر بر دستمزدها

We suggest that firms in a local labour market may be able to exploit worker mobility costs and offer immobile workers wages that are lower than their marginal product. If so, the ability of employers to exploit worker immobility in setting wages would decline in the competitiveness of the local labour market. We test this intuition using a measure of individual mobility costs and measures of local labour market competition. Our findings suggest that worker immobility causes substantial wage variation across workers in small, weakly competitive markets, and in occupations where wages are individually bargained.

Workers face important monetary and psychic costs of moving across locations. Since migration is costly, worker moving decisions depend on whether the observed wage disparity between the destination and the origin suffices to cover the costs of moving. So, the presence of mobility costs may explain why workers choose to stay in low-wage local markets, instead of migrating to markets that offer higher wages. Although researchers in many disciplines — economics, sociology, psychology — concur that worker migration decisions are multidimensional and are greatly affected by individual mobility costs, rarely have they asked whether such costs influence the wage setting behavior of employers. In this paper, we examine if employers in a local labour market exploit worker mobility costs in their wage setting behavior. Specifically, we suggest that firms in a distinct local labour market (i.e. a metropolitan area) have an incentive to offer workers with positive mobility costs wages that are lower than their marginal product. Such exploitation is possible since workers with positive mobility costs may be willing to accept lower wages to stay in their current market rather than move to another location and pay the associated mobility costs. If employers have wage bargaining power on account of worker mobility costs, that power would decline in the intensity of the local labour market competition. For example, in a monopsonistic market, the firm faces no local competition, so the local monopsonist is in position to exploit immobile workers and offer them lower wages. In a market with a large number of employers, on the other hand, labour market competition would drive wages for immobile workers to their marginal product and no exploitation of worker immobility would be possible. In addition, wage discrimination based on worker immobility would be less feasible against workers in unionized occupations, where wages are collectively bargained. Overall, we expect workers with positive mobility costs to have lower wages, especially in less competitive metropolitan areas, and in occupations with weak union presence. A number of empirical exercises are produced to test this idea. We construct a measure of worker mobility costs using worker characteristics that capture individual immobility and measures of local labour market competition at the metropolitan area level based on occupation. These measures are used to estimate the effect of worker immobility and local competition on wages. Empirical results show that wage discrimination based on worker immobility causes substantial wage variation across equally productive workers in small, weakly competitive metropolitan areas. Our results also show that immobile workers earn substantially lower wages in less competitive markets than what they would earn in large, competitive markets, where firms have limited wage setting power. Finally, the negative effect of worker immobility on wages is lower for workers in highly unionized occupations, where wages are collectively bargained.

In this paper, we discuss the possibility that firms in a local labour market exploit individual mobility costs to offer immobile workers wages that are lower than their marginal product. The wage setting power firms enjoy due to worker immobility should diminish in the intensity of the local labour market competition; wages for workers in small, less competitive local markets would be more affected by worker mobility costs. This intuition has two important implications. First, exploitation of worker immobility causes wage variation across equally productive workers within the same market, especially in less competitive MSAs. Second, holding worker immobility constant, wage disparities across MSAs of different size may be partly explained by differences in the local labour market competition. Our empirical analysis provides substantial support for the idea that worker immobility affects the wage setting behavior of firms. Less mobile workers have significantly lower wages compared to their counterparts while the magnitude of exploitation is significantly higher for workers in less competitive MSAs. Moreover, workers in highly unionized occupations are less subject to wage discrimination, since wages in such occupations are collectively bargained. The findings in this paper contribute to the understanding of the important wage differences across local labour markets. High wages in large MSAs are generally associated with high productivity, high cost of living, and undesirable local amenities. This paper introduces an additional explanation, that is, the lack of market competition in smaller MSAs allows firms to offer immobile workers lower wages. In conclusion, our work indicates that differences in the intensity of the local labour market competition should have an important role in the discussion of the determinants of wage disparities across metropolitan areas.