Working Papers

Trends in Worker Bargaining Power [Job Market Paper]

This paper investigates worker bargaining power evolution over the last decades and its consequences on the American and French labor markets. I use a framework where wages and marginal productivity of labor are linked by a negotiation process, allowing the bargaining power of the parties involved to vary over time. I uncover a sizable disproportion between employees and employers in salary negotiation by estimating an average worker bargaining power of 17% in the US and 25% in France. However, these average estimates mask an aggregate declining trend in both countries since the 90s. Worker bargaining power followed a hump-shaped trend in the US over the last 60 years, peaking in the 80s and then halving until nowadays. In France, it has also been declining steadily over the last 30 years. These patterns help explain the low unemployment and wage growth over the last decades: firms exploited the low level of worker bargaining power to hire an inefficiently high number of employees. I propose marginal wage and profit taxes to restore labor market efficiency. Technological advancement, regulation, trade, and outsourcing seem to play a minor role in the decline of bargaining power. Gender and occupation differences are crucial, with male employees and those performing non-routine abstract jobs experiencing the most significant erosion of bargaining power.

Mergers and Markups (joint with Vardges Levonyan), draft available upon request

Recent evidence on the rise in markups has attracted considerable attention on potential causes and explanations. In a decomposition exercise, De Loecker, Eeckhout, and Unger (2020) find that a large portion of the economy-wide increase in aggregate markups is due to the reallocation term: larger growth of the higher markup firms relative to the average. We revisit this finding and evaluate how much of the firm size increase is due to internal growth and how much is due to acquiring other companies through mergers and acquisitions. Utilizing a comprehensive dataset of M\&A activity over the last 40 years, we find that 60 percent of the reallocation term and 38 percent of the overall markup increase is due to merger activities. The merger and acquisition effect on markups grows considerably after 1999, coinciding with aggregate patterns of M&A activities. Manufacturing and information industries account for a large portion of the aggregate pattern. We further find that merger activities also impact acquirer markups.

Measuring Markups with Revenue Data (joint with Ivan Kirov and James Traina)

We propose a method that generates unbiased and consistent markup estimates using only revenue data. Building on standard production function estimators, our method requires flexibly modeling markups as a specified function of observables and fixed effects and modifying physical productivity process assumptions into revenue productivity process assumptions. We show that it solves the omitted price bias without imposing additional assumptions on the demand side or the competition structure. Our suggested two-step estimator is simple in concept and implementation, requiring only common regression techniques and information available in most data settings.

Work in Progress

Resisting Creative Destruction: Industry Dynamics with Dominant Firms (joint with Julian Schärer)

Bargaining Power and Labor Force Participation

Markups: Theory Does Not Meet Data