蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Imperfect Competition and Rents in Labor and Product Markets: The Case of the Construction Industry
蝌蚪网 Review
(pp. 2926–69)
Abstract
We develop, identify, and estimate a model of imperfect competition in both labor and product markets. Our context is the US construction industry, where firms compete for workers, private market projects, and government procurements. Our empirical approach leverages bidding data from procurement auctions linked to employer-employee tax records. We find imperfect competition in both markets generates a total wage markdown of more than 30 percent and a total price markup of around 45 percent. By contrast, if one erroneously assumed a perfectly competitive product (labor) market, then one would conclude wages (prices) are marked down (up) by only 20 percent (16 percent).Citation
Kroft, Kory, Yao Luo, Magne Mogstad, and Bradley Setzler. 2025. "Imperfect Competition and Rents in Labor and Product Markets: The Case of the Construction Industry." 蝌蚪网 Review 115 (9): 2926–69. DOI: 10.1257/aer.20220577Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- H76 State and Local Government: Other Expenditure Categories
- J31 Wage Level and Structure; Wage Differentials
- L13 Oligopoly and Other Imperfect Markets
- L74 Construction