In the debate on the economic effects of labor market regulation much work has focused on minimum wages. A legal minimum wage remains one of the most controversial policy issues. The controversy arises for two main reasons: first, there is no consensus over the economic impacts of the minimum wage mandate, especially its effect on employment, and, second, there is a disagreement over the empirical methods used to identify the minimum wage effects. Although the standard competitive model predicts that wage floors should have a negative impact on employment, empirical work shows mixed results. This dissertation explores a number of adjustment channels that can explain the paradox of the small and insignificant employment effects uncovered in the MW literature. Specifically, the economic impact of the most recent 2007-2009 Federal minimum wage increase (from $5.15 to $7.25 an hour) is analyzed using a sample of quick-service restaurants in Georgia and Alabama. In contrast to prior studies, store-level bi-weekly payroll records for individual employees are used, allowing greater precision in measuring the relative cost-impact of the MW on establishments. Despite significant variation in the cost-impact of the three-stage MW increase across establishments, regression analysis finds lack of a negative effect on employment and hours following each MW increase. Additional channels of adjustment are explored using unique data from manager surveys. Evidence suggests that higher product prices, lower profit margins, wage compression, reduced turnover and higher performance standards largely account for insignificant employment effects. These results are consistent with a number of alternative theoretical models of labor markets. An expanded version of the perfectly competitive model that incorporates additional margins of adjustment is also compatible with the reported findings.

Thesis advisor: Christopher Maxwell / This paper aims to measure the impact of increases to Seattle minimum wage from the years 2015 – 2018 on total earnings of the greater Seattle area. My research concentrates on low-wage industries but also touches upon the effect on high wage industries and the overall economy. Also, to ensure continuity of results, models were replicated at the federal level. This question is important because of a modern movement for higher state and city minimum wages. There have been several research papers about this topic already; however many economists have come up with conflicting results. My methods are a combination of previously used methods in an attempt to provide an unbiased analysis. In addition, research that has been released on this topic only covers the initial increases in minimum wage from 2015 – 2016. My research expands on this time frame and analyzes the impact of minimum wage increases from 2015 – 2018. My results show a statistically significant positive impact of minimum wage on total earnings for the greater Seattle area, not just for low-wage industries but also for the overall economy. These results show that a high minimum wage can be beneficial for the economy. / Thesis (BA) — Boston College, 2019. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Departmental Honors. / Discipline: Economics.

This dissertation is about the in/stability over time of a contract-based inter-organizational relationship (IOR) which existed mostly under conditions of government monopsony (MG). The MG consisted of the institutional arrangements between the NHS and Higher Education sectors in England for the provision of education for the NHS non-medical professional workforce. The IOR was between the NHS education buyer (the ‘GM’) and Middlesex University (MU). An agent-centred historical institutionalism was used as the overall approach in the inquiry. The main components of the approach were resource dependence theory, concepts of historical dependence, and events in the IOR and its institutional and organizational environments. A multi-dimensional concept of IOR in/stability from the standpoints of the GM and MU which was grounded in the practices of the IOR was constructed. The inquiry traced the origins and subsequent development of the MG and the in/stability of the IOR over an 18 year period, 1995 - 2013. The main findings of the inquiry were: (1) The IOR originated in, and continued to exist mostly under conditions of MG (2) The IOR became less stable over time from the standpoint of MU; reductions in IOR stability occurred in dimensions of risk relating to the future performance of the IOR (3) Instability and threatened instability in the IOR were brought about mostly by the exercise of power by the GM and by the power dependence responses of MU. The thesis developed in the dissertation is that instability and threatened instability in the IOR were due mostly to a power imbalance in the IOR, in favour of the GM, between the GM and MU. The source of that power imbalance was a combination of: • The resource dependency of MU on the IOR • The conditions of MG and bilateral monopoly under which the IOR existed. The dissertation is concluded with a critique of MG as a technique for public sector management. Recommendations are made for new NHS-HE inter-sector and IOR arrangements to be established which take account of power imbalances and relations of mutual dependence between stakeholders. Recommendations for further research are also made.

The recent proliferation of administrative data sources has made it possible to examine numerous longstanding questions related to labor market functions. I make use of these data sources to provide new insights into three such questions; the extent of firms' market power in labor markets, the nature of gains from workers' skill specialization, and the role of job search networks in the locational choices of immigrants. In Chapter 1, I examine labor market monopsony, the extent to which markets deviate from perfect competition. Prior literature suggests two methods to estimate the extent of monopsony: studying the degree to which firms adjust wages in response to desired changes in employment growth, and measuring the degree to which workers' voluntary separations are sensitive to their own wages. Existing studies have found widely varying answers to these two questions in different contexts. I leverage unique features of Brazilian administrative data to demonstrate that these approaches provide very different results even on the same sample of employees, and I rule out a variety of alternative empirical explanations. These results suggest that labor market monopsony is primarily a function of workers' attachment to their current employers. In Chapter 2, I study the wage premium associated with skill specialization. While standard models predict that more technologically-advanced firms will hire more specialized workers, I show that higher-ability individuals may actually sort into less specialized occupations within firms. I test these predictions by constructing occupation-level measures of skill specialization from the U.S. O*NET database, matched to Brazilian administrative data. While I find that specialization among production skills is associated both with higher wages and with employment at higher-wage firms, I find no evidence of specialization premia in cognitive skills. Finally, in Chapter 3 I study the extent to which job search networks influence new immigrants' decisions to locate in ethnic enclaves. Using detailed data from the New Immigrant Survey, I show that immigrants to the U.S. who arrive without job offers are significantly more likely to locate in enclaves, even after accounting for a wide range of pre-migration and time-invariant characteristics.

My dissertation consists of four chapters that are motivated by understanding the intended and unintended economic outcomes of public policy in the labor market. My particular focus is studying how individuals respond to incentives created by policy and welfare reform. The first chapter explores the effect of expanding dependent health insurance coverage to young adults. I study both the outcomes from state policies and the recent Affordable Care Act (ACA). In the second chapter I analyze the unintended consequences of a New Deal policy that paid farmers to reduce production. As a result, I find significant displacement of croppers and tenants in the Cotton South. The third chapter ties together the micro-foundations of the labor supply to the firm with the macroeconomic areas of on-the-job search theory and the business cycle. By using employee level data from two US manufacturing firms in the volatile inter-war period, I show that these two firms had significantly more wage setting power during recessions than expansions. My final chapter addresses the question of how does reduced immigration restrictions affect the composition of immigrants in the US.

In recent years the development community has pressured LDCs to privatize agro- industries. This pressure stems from poor public enterprise performance and an ideological shift. However, public enterprises mitigate market failures. The major objective of this study is to measure the impact of privatizing the Nepalese yak cheese industry. To achieve the objective, public and private behavior are determined. The impacts of privatization stem from changes in monopsony behavior and institutional constraints that differ between the public and private sectors. The Dairy Development Corporation (DDC) of Nepal produces yak cheese. The DDC's mandate is to provide a "fair" price to consumers and producers. Private producers of cheese have emerged in recent years. Milk shed structures include: single DDC factories, single private factories, multiple private factories, and mixed production. Market performance is evaluated using partial equilibrium models that include the yak cheese and milk markets. Economic surplus measures are used for evaluation. Herder producer surplus is the most important criterion because herders are the poorest beneficiaries. The impact of privatization is determined through comparison of observed DDC and predicted private equilibria. Private equilibrium is predicted using a simultaneous equation system developed for this research. The equations ensure that supply and demand balance at the aggregate and individual milk shed levels. The Lerner index is incorporated to model monopsony behavior. Private monopsony parameters used in the system are estimated econometrically. A private equilibrium is also predicted with a modified firm cost structure reflecting reduced impacts of institutional constraints. Findings show that private and public firms are exercising monopsony power. DDC privatization can be advocated because it increases herder producer surplus by 15.4%. Total surplus falls slightly because private cheese is lower quality. DDC privatization decreases herder welfare in milk sheds that support only a single firm. The simultaneous equation system developed to predict the private market equilibrium for post agro-industry privatization has the potential to be extended to solve a broader range of economic problems. The equation system can be adapted to applications where there are multiple production regions and monopsony behavior varies by regional characteristics. / Ph. D.

The United States acute care hospital (ACH) market provides a unique environment in which to examine questions about market structure and performance. The ACHs operate in a mature market of health services that is highly regulated and has one dominant primary consumer of services. The uncharacteristic industry structure offers the opportunity to analyze pervasive agency relationships and capital structure issues in a new setting. In addition, the policies of the U.S. Government have created an environment in which tacit collusion is likely to flourish, which leads to market buyer power (monopsony, or buyers acting as one monopoly buyer). A key question is the extent to which monopsony and agency affect capital structure decisions. Agency is defined by Ross (1973, p.134) as a relationship formed between a principle and their agents, “when one, designated as the agent, acts for, on behalf of, or as representative for the other, designated the principal, in a particular domain of decision problems.” This thesis extends the agency framework provided by Jensen and Meckling (1976), along with the econometric understanding of monopsony in healthcare via tacit collusion, as suggested by Pauly (1998) and Sevilla (2005), and the research constraints of monopsony under an all-or-nothing contract, as outlined by Taylor (2003). Using data on ACHs from the period of 1995 to 2007 for approximately 5,000 ACHs, which was derived from the Medicare Cost Report and medical payments for a sub-population of 1,500, this research examines the determinants of capital structure in a distorted market. Building upon this initial analysis, the research seeks to examine the effects of market distortions upon free cash flow, and ultimately, capital structure. Two theories of distortion are presented that would affect free cash flow: The first is that of the agency cost of free cash flow and signaling, and the second is a theory of monopsony via tacit collusion between buyers. A model of the agency relationship between ACHs and the U.S. Government is proposed, promoting agency cost (signaling and the agency cost of free cash flows) as a causal relation with free cash flows and capital structure (Jensen & Meckling 1976; Jensen 1986). Empirical models of agency are constructed, examining the dependence on government business and the relation to the leverage (signaling) and free cash flows (agency cost of free cash flows) for ACHs. In addition, a complementary theory of capital structure determinant via market power (monopsony) is formulated, suggesting that monopsony conditions within the ACH market affect free cash flows and capital structure. The analysis provides a framework for understanding the environments in which ACHs operate and the strength of bargaining within the market. The research concludes with a review of the determinants of capital structure in light of the inefficiencies and distortions of the industry and the relationships observed.

Les effets de la sévère crise économique qui a suivi la crise financière en 2007-2008 s’est fait fortement ressentir sur le marché du travail. La croissance du chômage et l’insécurité de l’emploi ont considérablement influencé le pro­cessus de négociation salariale entre employeurs, employés et syndicats. Cette évolution a mis en avant la nécessité de comprendre à quel point ce processus ainsi que le rapport de force entre les parties en présence diffèrent en période de croissance et en période de ralentissement économique. A.n de répondre à cette question, la présente thèse étudie le comportement des employeurs, des employés et des syndicats lors du processus de fixation des salaires, en mettant partic­ulièrement l’accent sur l’évolution de l’interaction entre ces trois agents à travers le cycle économique. Les deux premiers chapitres de ma thèse analysent les fluc­tuations du pouvoir des syndicats à travers le cycle et relient ces fluctuations aux fluctuations des salaires. Le premier chapitre propose un cadre théorique qui associe frictions d’appariement et syndicats et démontre que les rigidités salariales proviennent de façon endogène du comportement des syndicats. Le deuxième chapitre de ma thèse teste ces prédictions empiriquement, en utilisant un panel d’industries sur la période 1987-2000 aux États-Unis. Les résultats confirment l’hypothèse que les salaires sont moins corrélés au niveau de pro­ductivité lorsqu’ils sont négociés collectivement. L’intensification des propriétés contracycliques de la part salariale est au coeur du mécanisme. Le troisième chapitre propose un modèle avec affichage des salaires qui examine l’évolution du pouvoir de monopsone des entreprises à travers le cycle économique. Les conséquences en termes de dispersion des salaires sont étudiées. Le premier chapitre de ma thèse propose un modèle dynamique du marché du travail qui associe deux caractéristiques principales : frictions d’appariement et syndicats. A.n d’étudier comment les syndicats influencent la volatilité des salaires à travers le cycle, je dissocie les deux composants de la volatilité des salaires : la volatilité du surplus total et la volatilité du pouvoir de négocia­tion effectif des syndicats. Le pouvoir de négociation effectif des syndicats est dé.ni comme la part du surplus total alloué aux travailleurs. Je prouve que ce pouvoir de négociation effectif est endogène et contracyclique, résultat qui provient directement de la fonction d’utilité des syndicats. L’intuition est la suivante. Du fait que les syndicats internalisent la relation entre le niveau des salaires et la création de postes, ils font face à un arbitrage entre le niveau des salaires et le niveau de l’emploi. Ainsi, les préférences des syndicats (donnant la priorité aux salaires ou à l’emploi) fluctuent à travers le cycle, et il en est de même du pouvoir de négociation effectif des syndicats. Il en résulte que, lorsque l’économie est touchée par un choc de productivité, la dynamique du pouvoir de négociation effectif des syndicats neutralise partiellement la dynamique du surplus total, mécanisme qui crée de la rigidité salariale. Le modèle est carac­térisé par la coexistence d’un secteur non syndiqué, dans lequel les salaires sont individuellement négociés à la Nash, avec un secteur syndiqué. En calibrant ce modèle avec des données américaines, j’obtiens qu’un choc positif entraine, au moment du choc, une compression de la prime syndicale, suivi par une aug­mentation régulière de cette prime à mesure que la proportion de travailleurs employés augmente. En corollaire, l’emploi réagit plus fortement lorsque les salaires sont négociés collectivement, mais l’effet est moins persistent. / The consequences of the sudden and severe contraction of industrial output in the aftermath of the .nancial crisis of 2007-2008 are increasingly being felt in the labor market. Rising unemployment and job insecurity has greatly in­.uenced wage bargaining interactions between firms, workers and trade unions. It pointed out the necessity to understand how di.erent were the wage-setting process and the balance of power between the main actors in good times and bad. As an answer to this issue, this dissertation investigates the wage-setting behavior of .rms, workers and trade unions, placing particular emphasis on how the interaction between these three economic agents changes over the business cycle. The two first chapters of the thesis analyze the fluctuations of the power of trade unions over the cycle, and relate these .uctuations to the .uctuations of wages. The .rst chapter proposes a theoretical framework with search and matching frictions and trade unions and shows how wage rigidity arises endoge­nously due to the behavior of unions. The second chapter tests these predictions empirically, using a panel of U.S. industries over the period 1987-2000. The re­sults confirm the predictions that wages are less correlated with productivity when collectively bargained. The intensi.cation of the countercyclicality of the labor share is at the core of the mechanism. The third chapter proposes a model with wage posting and investigates how them onopsonistic power of firmse volves along the cycle. The consequences in terms of wage dispersion are examined. The .rst chapter of the dissertation proposes a dynamic model of the labor marketwhichintegratestwomainfeatures: matchingfrictionsandtradeunions. To examine how trade unions shape the volatility of wages over the business cycle, I decompose the volatility of wages into two components: the volatil­ity of the match surplus and the volatility of the e.ective bargaining power. Formally, I de.ne the e.ective bargaining power of the union as the share of the total surplus allocated to the workers. Starting from the union’s objective function, I prove that its e.ective bargaining power is endogenous and coun­tercyclical. Intuitively, because the union internalizes the relationship between the wage level and the job creation, it faces a trade-o. between the wage rate and the employment rate. Therefore, the union’s preferences (wage-oriented or employment-oriented) fluctuate along the cycle and so does its effective bargain­ing power. As a result, when the economy is hit by a productivity shock, the dynamics of the union’s effective bargaining power partially counteract the dy­namics of the total surplus and this mechanism delivers wage rigidity. I specify a model in which a non unionized sector, where wages are negotiated through a standard individual Nash bargaining, coexists with a unionized sector. In the model calibrated with U.S. data, I .nd that a positive productivity shock leads, on impact, to a compression of the union wage premium, followed by a steady increase of this premium as the proportion of employed workers in the trade unions increases. Relatedly, employment reacts stronger when wages are collectively bargained, but its pattern features less persistence.

This paper explores the monopsonistic implications of restricting bargaining power through the rookie draft and the concept of countervailing forces. It examines both the legal framework and the empirical outcomes of the court’s policy choices. This paper accomplishes this inquiry by exploiting the fact that players drafted late in the last round tend to be similar to players selected as undrafted free agents in expectation. This allows a natural experiment on the impact of the draft. In order to measure the impact of the draft, this paper examines career outcomes both in terms of compensation and length. I ultimately find little evidence that the draft creates monopsony power, and I provide some evidence suggesting that monopsony power impacts all rookies, as one would expect from an insider-outsider model.

Abstract The gap between the revenue generated by division one football players and the value of an athletic scholarship is the marginal revenue product of these athletes. Because of the monopsonistic behavior of the NCAA, division one institutions capture an economic rent from their student athletes. This paper measures the rents generated by NCAA division one football players in the six powerhouse conferences by using linear regressions based on variables such as university revenue, future NFL draft picks, undergraduate population, and weekly AP Top-25 rankings. This paper will inform its readers on how much money these student athletes are generating for the NCAA and their respective schools, and will provide understanding as to why there has been so much controversy regarding the payment of NCAA athletes.