LABOR MARKET POWER, SELF-EMPLOYMENT, AND DEVELOPMENT
The DEMS Economics Seminar series is proud to host
Francesco Amodio
McGill University
with P. Medina and M. Morlacco
ABSTRACT
This paper shows that self-employment shapes labor market power in low-income countries, with implications for industrial development. Using Peruvian data, we show that wage-setting power increases with concentration, but less so where self-employment is more prevalent. We build a general equilibrium model of oligopsony with worker sorting between wage work and self-employment. Concentration depresses wages, but self-employment increases workers’ sensitivity to wage changes, curbing labor market power. Policies to create salaried jobs make self-employment less attractive, reducing labor supply elasticity and increasing markdowns. Counterfactual analyses show that eliminating labor market power can boost industrial policy effectiveness by up to 60%.
The seminar will in presence, DEMS Seminar Room 2104, Building U7-2nd floor