nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒03‒20
twenty-two papers chosen by
Joseph Marchand
University of Alberta

  1. The supply, demand and characteristics of the AI workforce across OECD countries By Andrew Green; Lucas Lamby
  2. The Efficacy of Large-Scale Affirmative Action at Elite Universities By Cecilia Machado; Germán Reyes; Evan Riehl
  3. Firm Training By Dan A. Black; Lars Skipper; Jeffrey A. Smith; Jeffrey Andrew Smith
  4. When You Can't Afford to Wait for a Job: The Role of Time Discounting for Own-Account Workers in Developing Countries By Scarelli, Thiago; Margolis, David N.
  5. Allocative efficiency, plant dynamics and regional productivity: Evidence from Germany By Bruhn, Simon; Grebel, Thomas
  6. Advanced Digital Technologies and Investment in Employee Training: Complements or Substitutes? By Brunello, Giorgio; Rückert, Désirée; Weiss, Christoph T.; Wruuck, Patricia
  7. Causal Misperceptions of the Part-Time Pay Gap By Annekatrin Schrenker
  8. Conscientiousness and Labor Market Returns: Evidence from a Field Experiment in West Africa By Mathias Allemand; Martina Kirchberger; Sveta Milusheva; Carol Newman; Brent Roberts; Vincent Thorne
  9. Labour market power and the dynamic gains to openness reforms By Priyaranjan Jha; Antonio Rodriguez-Lope; Adam Hal Spencer
  10. Home Bias in Top Economics Journals By Bethmann, Dirk; Bransch, Felix; Kvasnicka, Michael; Sadrieh, Abdolkarim
  11. Selective Exercise of Discretion in Disability Insurance Awards By Garcia-Gomez, Pilar; Koning, Pierre; O'Donnell, Owen; Herl, Carlos Riumallo
  12. Recovering Income Distribution in the Presence of Interval-Censored Data By Canavire Bacarreza, Gustavo J.; Rios-Avila, Fernando; Sacco-Capurro, Flavia
  13. Aging Population and Technology Adoption By Daniele Angelini
  14. The Contribution of Short-Cycle Programs to Student Outcomes: Evidence from Colombia By Lelys Dinarte-Diaz; Maria Marta Ferreyra; Tatiana Melguizo; Angelica Sanchez
  15. The effect of pension wealth on employment By Sebastian Becker; Hermann Buslei; Johannes Geyer; Peter Haan
  16. Weak sectors and weak ties? Labour dependence and asymmetric positioning in GVCs By Lorenzo Cresti; Maria Enrica Virgillito
  17. The Transformation of Public Policy Analysis in Times of Crisis – A Microsimulation-Nowcasting Method Using Big Data By O'Donoghue, Cathal; Sologon, Denisa Maria
  18. What Makes a Program Good? Evidence from Short-Cycle Higher Education Programs in Five Developing Countries By Marina Bassi; Lelys Dinarte-Diaz; Maria Marta Ferreyra; Sergio Urzua
  19. The Effects of Work Requirements on the Employment and Income of TANF Participants: Working Paper 2023-03 By Justin Falk
  20. Why High-level Executives Earn Less in the Governmental Than in the Private Sector By Amihai Glazer; Hideki Konishi
  21. State-Based Conflict and Entrepreneurship – Empirical Evidence By Wim Naudé; Lelys Ernesto Amorós; Tilman Brück
  22. Monopsony in Professional Labor Markets: Hospital System Concentration and Nurse Wages By Sylvia A. Allegretto; Dave Graham-Squire

  1. By: Andrew Green; Lucas Lamby
    Abstract: This report provides representative, cross-country estimates of the artificial intelligence (AI) workforce across OECD countries. The AI workforce is defined as the subset of workers with skills in statistics, computer science and machine learning who could actively develop and maintain AI systems. For countries that wish to be at the forefront of AI development, understanding the AI workforce is crucial to building and nurturing a talent pipeline, and ensuring that those who create AI reflect the diversity of society. This report uses data from online job vacancies to measure the within-occupation intensity of AI skill demand. The within-occupation AI intensity is then weighted to employment by occupation in labour force surveys to provide estimates of the size and growth of the AI workforce over time.
    Keywords: Artificial Intelligence
    JEL: J21 J23 J24 J31 J44
    Date: 2023–02–23
  2. By: Cecilia Machado (Graduate School of Economics, Getúlio Vargas Foundation); Germán Reyes (Department of Economics, Cornell University); Evan Riehl (Department of Economics and ILR School, Cornell University)
    Abstract: We study the effects of affirmative action at an elite Brazilian university that adopted race- and income-based quotas for 45 percent of its admission slots. We link admission records to national employer-employee data to examine how the policy affected the careers of both its targeted beneficiaries and the university’s other students. For students admitted through affirmative action, the policy led to a modest increase in early-career earnings that faded as their careers progressed. Conversely, the adoption of affirmative action caused a large and persistent decrease in earnings for the university’s most highly ranked students. We present evidence that these negative earnings effects are driven by a reduction in human capital accumulation and a decline in the value of networking.
    JEL: I26 J24 J31
    Date: 2023–03
  3. By: Dan A. Black; Lars Skipper; Jeffrey A. Smith; Jeffrey Andrew Smith
    Abstract: Workers acquire skills through formal schooling, through training provided by governments, and through training provided by firms. This chapter reviews, synthesizes, and augments the literature on the last of these, which has languished in recent years despite the sizable contribution of firm training to the overall stock of worker human capital. We engage with research on the determinants of receipt of firm training, the effects of firm training on workers outcomes, and various policy debates related to firm training, including training taxes, training subsidies, non-compete agreements, and the minimum wage. Our discussion emphasizes the complex measurement issues associated with firm training and the interplay of applied theory and applied econometrics in the related empirical literature.
    Keywords: training, human capital, firm, worker, classroom, learning by doing, monopsony, minimum wage, training tax, non-compete
    JEL: I20 I24 J24 J42 J31
    Date: 2023
  4. By: Scarelli, Thiago (Paris School of Economics); Margolis, David N. (Paris School of Economics)
    Abstract: Frictional labor markets impose a fundamental trade- off: individuals may work on their own at any time, but can only take a potentially better-paid wage job after spending some time looking for it, suggesting that intertemporal considerations affect how people choose their occupation. We formalize this intuition under the job search framework and show that a sufficiently high subjective discount rate can justify the choice for own-account work even when it pays less than wage work. With this simple model, we estimate a lower bound for the discount rate that is implicit in the occupational choice of urban own-account workers in Brazil. We find that at least 65 percent of those workers appear to discount the future at rates superior to those available in the credit market, which suggests constrained occupational choice. Finally, we show that the estimated lower bound of the preference for the present is positively associated with food, clothing, and housing deprivation.
    Keywords: own-account work, self-employment, developing countries, financial constraints, time discounting, Brazil
    JEL: J22 J24 J31 J64
    Date: 2023–02
  5. By: Bruhn, Simon; Grebel, Thomas
    Abstract: This paper argues that regional variation in the efficiency of labor allocation among German manufacturing plants plays a critical role in explaining regional disparities in productivity. In fact, we show that over 50% of the East-West productivity gap is associated with a less efficient labor allocation in former East Germany. Yet, we also demonstrate that the mere focus on East-West comparisons hides partially large differences between the German federal states. These results suggest that regional productivity differences could be substantially narrowed by a more efficient labor allocation among plants. With respect to the underlying causes, we find evidence that the regional differences in allocative efficiency are significantly correlated with differences in export intensity, market concentration and plant size.
    Keywords: Regional productivity gap, productivity decomposition, allocative efficiency, labor allocation
    JEL: E24 J24 L11 L25 O47
    Date: 2023
  6. By: Brunello, Giorgio (University of Padova); Rückert, Désirée (European Investment Bank); Weiss, Christoph T. (European Investment Bank); Wruuck, Patricia (European Investment Bank)
    Abstract: Using firm-level data covering the 27 EU countries, the UK and the US, we show that employers tend to reduce investment in training per employee after adopting advanced digital technologies (ADT). We estimate with a control function approach firm-level production functions augmented with two factors, the training stock per employee and digital technology use. We show that ADT use and employee training are substitutes in production, implying that an increase in the former negatively affects the marginal productivity of the latter, and that a decline in the cost of introducing ADT reduces employers' investment in training per employee. These findings point to challenges in realizing high levels of firm-sponsored training for employees in increasingly digital economies.
    Keywords: digitization, automation, training, productivity
    JEL: D24 J24
    Date: 2023–02
  7. By: Annekatrin Schrenker
    Abstract: This paper studies if workers infer from correlation about causal effects in the context of the part-time wage penalty. Differences in hourly pay between full-time and part-time workers are strongly driven by worker selection and systematic sorting. Ignoring these selection effects can lead to biased expectations about the consequences of working part-time on wages (’selection neglect bias’). Based on representative survey data from Germany, I document substantial misperceptions of the part-time wage gap. Workers strongly overestimate how much part-time workers in their occupation earn per hour, whereas they are approximately informed of mean full-time wage rates. Consistent with selection neglect, those who perceive large hourly pay differences between full-time and part-time workers also predict large changes in hourly wages when a given worker switches between full-time and part-time employment. Causal analyses using a survey experiment reveal that providing information about the raw part-time pay gap increases expectations about the full-time wage premium by factor 1.7, suggesting that individuals draw causal conclusions from observed correlations. De-biasing respondents by informing them about the influence of worker characteristics on observed pay gaps mitigates selection neglect. Subjective beliefs about the part-time/full-time wage gap are predictive of planned and actual transitions between full-time and part-time employment, necessitating the prevention of causal misperceptions.
    Keywords: part-time pay gap, wage expectations, selection neglect, causal misperceptions
    JEL: J31 D83 D84
    Date: 2023–01–13
  8. By: Mathias Allemand (University of Zurich); Martina Kirchberger (Trinity College Dublin); Sveta Milusheva (The World Bank); Carol Newman (Trinity College Dublin); Brent Roberts (University of Illinois at Urbana-Champaign); Vincent Thorne (Trinity College Dublin)
    Abstract: Non-cognitive skills are increasingly recognized as important determinants of labor market outcomes. To what extent specific skills can be affected in adulthood remains an open question. We conducted a randomized controlled trial with low-skilled employed workers in Senegal where workers were randomly assigned to receive a training intervention designed to affect conscientiousness-related skills. We found that treated workers were significantly more likely to stay in their job and have higher wages nine months after the intervention. Our findings suggest that non-cognitive skills can be affected even later in the life cycle and can have substantial labor market returns.
    Keywords: non-cognitiveskills, labormarkets, conscientiousness
    JEL: J24 M53 O15
    Date: 2023–01
  9. By: Priyaranjan Jha; Antonio Rodriguez-Lope; Adam Hal Spencer
    Abstract: We develop a dynamic general equilibrium framework with firm heterogeneity and monopsonistic labour markets, for quantification of the impact of trade and FDI liberalisation episodes. Firms make standard extensive margin investment choices into exporting and multinational statuses. The labour market features upward-sloping supply curves and love of variety in employment. These features interact with the variable-fixed cost tradeoff of outward activity. We calibrate the model to U.S. data and study the effect of reductions in tariffs and outward FDI taxes in both bilateral and unilateral contexts, examining steady state and transitional effects. We compare the predictions of this model with a more standard version with perfectly competitive labour markets. Our headline finding is that the model with labour market power gives substantially different quantitative estimates to the perfectly competitive version. For instance, a bilateral trade liberalisation gives welfare gains that are over 10 times larger in the presence of monopsony power. Significant quantitative differences persist with a variety of robustness exercises.
    Keywords: Monopsonistic labour market; Trade liberalisation; Love of firm variety; Dynamics; Foreign direct investment; Corporate taxation
    Date: 2023
  10. By: Bethmann, Dirk (Otto-von-Guericke University Magdeburg); Bransch, Felix (Otto-von-Guericke University Magdeburg); Kvasnicka, Michael (Otto-von-Guericke University Magdeburg); Sadrieh, Abdolkarim (Tilburg University)
    Abstract: Two of the top economics journals have institutional ties to a specific university, the Quarterly Journal of Economics (QJE) to Harvard University and the Journal of Political Economy (JPE) to the University of Chicago. Researchers from Harvard, but also nearby Massachusetts Institute of Technology (MIT), and from Chicago (co-)author a disproportionate share of articles in their respective home journal. Such home ties and publication bias may harm, but also benefit, article quality. We study this question in a difference-in-differences framework, using data on both current and past author affiliations and cumulative citation counts for articles published between 1995 and 2015 in the QJE, JPE, and American Economic Review (AER), which serves as a benchmark. We find that median article quality is lower in the QJE if authors have ties to Harvard and/or MIT than if authors are from other top-10 universities, but higher in the JPE if authors have ties to Chicago. We also find that home ties matter for the odds of journals to publish highly influential and low impact papers. Again, the JPE appears to benefit, if anything, from its home ties, while the QJE does not.
    Keywords: publishing process, institutional ties, citations, home bias
    JEL: A11 I2 J24
    Date: 2023–02
  11. By: Garcia-Gomez, Pilar (Erasmus University Rotterdam); Koning, Pierre (Vrije Universiteit Amsterdam); O'Donnell, Owen (Erasmus University Rotterdam); Herl, Carlos Riumallo (Erasmus University Rotterdam)
    Abstract: Variation in assessor stringency in awarding benefits leaves applicants exposed to uninsured risk that could be systematic if discretion were exercised selectively. We test for this using administrative data on applications to the Dutch disability insurance program. We find that discretion is more often exercised in favor of lower-waged applicants. Pre-disability wages drop discontinuously just above disability thresholds for entitlement to partial benefits. Assessors are more likely to discard the highest-paying algorithm-generated job matches that determine earnings capacity and entitlement when evaluating lower-waged applicants. While these applicants benefit on average, they are exposed to greater risk from between assessor variation.
    Keywords: disability insurance, screening
    JEL: D73 H42 H55
    Date: 2023–02
  12. By: Canavire Bacarreza, Gustavo J. (World Bank); Rios-Avila, Fernando (Levy Economics Institute); Sacco-Capurro, Flavia (World Bank)
    Abstract: This paper proposes a method to analyze interval-censored data, using multiple imputation based on a heteroskedastic interval regression approach. The proposed model aims to obtain a synthetic data set that can be used for standard analysis, including standard linear regression, quantile regression, or poverty and inequality estimation. The paper presents two applications to show the performance of the method. First, it runs a Monte Carlo simulation to show the method's performance under the assumption of multiplicative heteroskedasticity, with and without conditional normality. Second, it uses the proposed methodology to analyze labor income data in Grenada for 2013–20, where the salary data are interval-censored according to the salary intervals prespecified in the survey questionnaire. The results obtained are consistent across both exercises.
    Keywords: interval-censored data, Monte Carlo simulation, heteroskedastic interval regression, wages
    JEL: C15 C34 J3
    Date: 2023–02
  13. By: Daniele Angelini (University of Konstanz)
    Abstract: Population aging affects the relative supply of inputs in the economy altering the in-centives to adopt different types of technology. Empirically, I document a hump-shaped relation between the age of the population and the adoption of new-technology proxied by the ICT capital share. To explain the non-monotonic relationship and identify the mech-anisms at play, I build a dynamic general equilibrium model with endogenous technology and R&D-driven technological progress. New-technology is defined as a labor-saving (capital-intensive) technology requiring skills to be used. An increase in the capital-to-labor ratio driven by population aging increases new-technology adoption while the increasing scarcity of young workers that have higher incentives to acquire the comple-mentary skills to new-technology reduces it. The model, calibrated to fit European data, shows that the demographic structure of the population is a major determinant of tech-nology adoption. Population aging explains almost half of the increase in new-technology adoption in the period 1995-2020 and it determines its reduction in the period 2020-2045. A decomposition exercise shows that population aging is a primary source of the increase in the skill premium explaining a larger share of its increase than technological progress.
    Keywords: Automation, Demographic change, Human capital, Inequality, R&D, OLG
    JEL: J11 J24 J26 J31 E25 H23 O31 O33
    Date: 2023–02–01
  14. By: Lelys Dinarte-Diaz; Maria Marta Ferreyra; Tatiana Melguizo; Angelica Sanchez
    Abstract: Short-cycle higher education programs (SCPs), lasting two or three years, capture about a quarter of higher education enrollment in the world and can play a key role enhancing workforce skills. In this paper, we estimate the program-level contribution of SCPs to student academic and labor market outcomes, and study how and why these contributions vary across programs. We exploit unique administrative data from Colombia on the universe of students, institutions, and programs to control for a rich set of student, peer, and local choice set characteristics. We find that program-level contributions account for about 60-70 percent of the variation in student-level graduation and labor market outcomes. Our estimates show that programs vary greatly in their contributions, across and especially within fields of study. Moreover, the estimated contributions are strongly correlated with program outcomes but not with other commonly used quality measures. Programs contribute more to formal employment and wages when they are longer, have been provided for a longer time, are taught by more specialized institutions, and are offered in larger cities.
    Keywords: short-cycle programs, value added, quality, higher education
    JEL: I22 I23 I26 J24
    Date: 2023
  15. By: Sebastian Becker; Hermann Buslei; Johannes Geyer; Peter Haan
    Abstract: This study provides novel evidence about the pension wealth elasticity of employment. For the identification we exploit reform-induced variation of pension wealth that is related to the number of children but which does not affect the implicit tax rate of employment. We use a difference-in-differences estimator based on administrative data from the German pension insurance and find that, on average, the negative employment effect of pension wealth is significant and economically important. Heterogeneity analyses document a strong age pattern showing that the employment effects are driven by behavioral responses of women close to retirement. The age pattern is partly explained by the positive effect of pension wealth on disability pensions after the age of 60.
    Keywords: pension reform, pension wealth elasticity, female labour supply, retirement, differences in differences
    JEL: H55 J13 J21 J26
    Date: 2023–01–03
  16. By: Lorenzo Cresti; Maria Enrica Virgillito
    Abstract: Focusing on labour requirements incorporated into GVCs, in the following, we develop a novel, non conventional measure of learning capabilities, represented by knowledge embodied along the division of labour within global production networks. In order to capture the division of labour, and the ensuing division of embodied knowledge, we move from monetary flows of production, or value-added embodied, to labour embodied in the I-O linkages. We focus on mature economies as offshoring has been particularly in place there. After constructing a new indicator of Bilateral Net Labour Dependence, we estimate its relationship with a measure of performance of industries, namely, labour productivity, seeking to challenge the established findings generally reporting a positive effect of GVCs participation for sector-level productivity. Our conjecture is that being in a weak position in terms of (net) labour provision results in an overall weakening of the capabilities of the loosing productive structure. We corroborate the conjecture with a panel analysis of OECD countries and industries for the time period 2000-2014.
    Keywords: Input-output; global value chains; international division of labour; dependency theory.
    Date: 2023–02–24
  17. By: O'Donoghue, Cathal (National University of Ireland, Galway); Sologon, Denisa Maria (LISER (CEPS/INSTEAD))
    Abstract: The urgency of the two crises, especially the COVID-19 pandemic, revealed the inadequacy of traditional statistical datasets and models to provide a timely support to the decision-making process in times of volatility. Drawing upon advances in data analytics for public policy and the increasing availability of real-time data, we develop and evaluate a method for real-time policy evaluations of tax and social protection policies. Our method goes beyond the state-of-the-art by implementing an aligned or calibrated microsimulation approach to generate a counterfactual income distribution as a function of more timely external data than the underlying income survey. We evaluate the simulation performance between our approach and the transition matrix approach by undertaking a nowcast for a historical crisis, judging against an actual change and each other. Nowcasting emerges as a useful methodology for examining up-to-date statistics on labour force participation, income distribution, prices, and income inequality. We find significant differences between approaches when the calibration involves structural heterogenous changes. The model replicates the changes in income distribution over one year; over the longer term, the model is able to capture the trend, but the precision of the levels weakens the further we get from the estimation year.
    Keywords: big data, policy analysis, nowcasting, microsimulation, COVID-19
    JEL: I31 I38 C54
    Date: 2023–02
  18. By: Marina Bassi; Lelys Dinarte-Diaz; Maria Marta Ferreyra; Sergio Urzua
    Abstract: Short-cycle higher education programs (SCPs) can play a central role in skill development and higher education expansion, yet their quality varies greatly within and among countries. In this paper we explore the relationship between programs’ practices and inputs (quality determinants) and student academic and labor market outcomes. We design and conduct a novel survey to collect program-level information on quality determinants and average outcomes for Brazil, Colombia, Dominican Republic, Ecuador, and Peru. Categories of quality determinants include training and curriculum, infrastructure, faculty, link with productive sector, costs and funding, and practices on student admission and institutional governance. We also collect administrative, student-level data on higher education and formal employment for SCP students in Brazil and Ecuador and match it to survey data. Using machine learning methods, we select the quality determinants that predict outcomes at the program and student levels. Estimates indicate that some quality determinants may favor academic and labor market outcomes while others may hinder them. Two practices predict improvements in all labor market outcomes in Brazil and Ecuador—teaching numerical competencies and providing job market information—and one practice—teaching numerical competencies—additionally predicts improvements in labor market outcomes for all survey countries. Since quality determinants account for 20-40 percent of the explained variation in student-level outcomes, quality determinants might have a role shrinking program quality gaps. Findings have implications for the design and replication of high-quality SCPs, their regulation, and the development of information systems.
    Keywords: higher education, short-cycle degrees, quality
    JEL: I22 I23 I26 J24
    Date: 2023
  19. By: Justin Falk
    Abstract: Experiments conducted in the mid-1990s show that a combination of work requirements and work supports substantially increased the employment of cash assistance recipients in Aid to Families with Dependent Children, the predecessor program to Temporary Assistance for Needy Families (TANF) while having little effect on recipients’ average income. There is little evidence on the effects of TANF’s work requirements, though, and recent research on other means-tested programs demonstrates that their work requirements have had little effect on employment and have substantially
    JEL: I38 J22
    Date: 2023–03–09
  20. By: Amihai Glazer (Department of Economics University of California, Irvine); Hideki Konishi (Waseda Institute of Political Economy Waseda University)
    Abstract: Governmental officials often have far greater responsibilities and make far more consequential decisions than do CEOs of private firms. Nevertheless, governmental officials often earn far less and face low-powered incentives.We offer explanations for the differences, considering Nash bargaining with the head of a governmental agency or with the CEO of a for-profit firm. If regulations restrict the price a governmental agency can charge, or if at a governmental agency one official sets price and a different official negotiates pay, then the head of a governmental agency may earn less than the head of a for-profit firm. We also show that a governmental official paid less than a private CEO faces weaker incentives. That in turn can make costs, other than CEO pay, higher at a governmental agency. We also consider elections, with voters choosing an official to set the price of the good, and voters choosing an official to negotiate with the CEO over his pay. A governmental official will be paid less than a CEO at a private firm if the income distribution in the population is sufficiently unequal.
    Keywords: CEO pay, governmental officials, Nash bargaining, tax distortions, structureinduced equilibrium, low-powered incentives
    JEL: D23 H11 J31 J45
  21. By: Wim Naudé (RWTH Aachen University and IZA Institute of Labor Economics, Germany; and African Studies Centre, University of Leiden, The Netherlands. Distinguished Visiting Professor, University of Johannesburg); Lelys Ernesto Amorós (EGADE Business School, Tecnol ́ogico de Monterrey, Mexico City, Mexico); Tilman Brück (Humboldt-University of Berlin, Germany; ISDC - International Security and Development Center, Berlin, Germany; and Leibniz Institute of Vegetable and Ornamental Crops, Großbeeren, Germany)
    Abstract: This paper investigates the relationship between state-based conflict and entrepreneurship. From a survey of the existing literature, we formulate two hypotheses: (1) state-based conflict has a negative association with productive and opportunity-motivated forms of entrepreneurship, and (2) a positive association with unproductive and necessity-motivated forms of entrepreneurship. We test these hypotheses by drawing on several state-based conflict and entrepreneurship measures, using appropriate estimators, and employing robustness checks. The evidence supports our hypotheses. Necessity-motivated start-up entrepreneurship is, on average, almost three times higher in countries in conflict than in countries not in conflict. Development level matters. In countries with less unemployment, more finance, and higher levels of physical, human capital and GDP, entrepreneurship is more resilient, and the ratio of female-to-male entrepreneurs in opportunity-motivated entrepreneurship higher.
    Keywords: Entrepreneurship, conflict, war, small business, employment
    JEL: J23 L26 M13 N40 O11 O17
    Date: 2023–02
  22. By: Sylvia A. Allegretto (Center for Economic and Policy Research); Dave Graham-Squire (University of California San Francisco)
    Abstract: Rolling waves of consolidation have significantly decreased the number of hospital systems in the U.S. potentially affecting industry quality, prices, efficiency, wages and more. This research concerns the growth in hospital system consolidation in local labor markets and its effect on registered nurse wages. We first use a nonparametric preprocessing data step via matching methods to define MSA-specific samples of workers analogous to nurses outside of the hospital sector. This step enables an accounting of heterogeneous MSA-specific baseline wage growth, and yields a standardized measure of nurse wage growth across MSAs used to set up a multi-site quasi-experiment. We then run a parsimonious linear model; market size matters, for every 0.1 increase in consolidation in smaller-MSAs, real hourly nurse wage growth decreased by $0.70 (p-value of 0.038). Though not the primary aim of this study, a secondary finding is that real hourly wages for nurses grew less than that of comparable workers by $4.08.
    Keywords: monopsony, hospital consolidation, imperfect competition, matching methods for data preprocessing.
    JEL: C55 I11 J01 J42
    Date: 2023–01–05

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