Wage Setting in Multiproduct Firms — Michael Irlacher

Speaker

Michael Irlacher (University of Linz)

Abstract

This paper reveals a new determinant of wage markdowns at the firm level, namely, the product scope. Using matched employer-employee data on Danish manufacturing firms, we document a negative elasticity between wages and firm scope, which is of a similar magnitude but opposite sign as the firm-size wage premium. We rationalize the wage discount using a theory where workers value the opportunity to switch product lines as an amenity. Multiproduct firms exercise their monopsony power to offer lower wages. Our findings have important implications for understanding labor market dynamics in times of rising concentration from the contribution of large multiproduct firms.

Authors

Jackie M.L. Chan (Aarhus University) – Michael Irlacher (University of Linz) – Michael Koch (Aarhus University) – Luca Macedoni (University of Milan)

Room

Media Room & online – if interested, please send an Email to kcg-office@ifw-kiel.de to receive the Seminar-Link or to register for participation in Kiel.

If you would like to be regularly informed about upcoming Kiel Trade Talks, please subscribe to our mailing list here.
If you do not wish to receive any further e-mails from us, please click here.