Working Paper: CEPR ID: DP17548
Authors: Nancy H. Chau; Ravi Kanbur; Vidhya Soundararajan
Abstract: The issue of employer power is underemphasized in the development literature. The default model is usually one of competitive labor markets. This assumption matters for analysisand policy prescription. There is growing evidence that the competitive labor markets assumption is not valid for developing countries. Our objective in this paper is to review this evidence,to present theoretical and policy perspectives which follow from it, and to highlight areas for further research.
Keywords: employment; employer power; developing countries
JEL Codes: J42; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Competitive labor market assumption not valid in developing countries (F66) | Significant impact on wage setting and employment (F66) |
| Low labor supply elasticity (J20) | Higher employer power (J29) |
| Relaxation of visa restrictions in UAE (Z38) | Improved earnings and labor retention (J39) |
| Minimum wage increases under monopsonistic conditions (J38) | Increased wages without adverse employment effects (J38) |
| Policies aimed at increasing enforcement of minimum wage laws (J38) | Mitigate employer power (J54) |
| Employer power (J54) | Wage markdowns (J31) |
| Labor supply elasticity (J20) | Wage markdowns (J31) |