The three articles in this special issue on “Monopsonistic Labour Markets” provide novel insights on how to model the reasons for employers’ monopsony power, how to measure it, and how much of it materialises in lower wages. We are confident that the studies published in this issue will be of high interest to specialists and a broader audience of economists alike. They definitely deserve a wide readership, and our not unwarranted hope is that they will provide new impulses to those partaking in the monopsony literature.

We estimate the effects of worker voice on productivity, job quality, and separations. We study the 1991 introduction of a right to worker representation on boards or advisory councils in Finnish firms with at least 150 employees, designed primarily to facilitate workforce-management communication. Consistent with information sharing theories, our difference-in-differences design reveals that worker voice slightly raised labor productivity, firm survival, and capital intensity. In contrast to the exit-voice theory, we find no effects on voluntary job separations, and at most small positive effects on other measures of job quality. A 2008 introduction of shop-floor representation had similarly limited effects.

Wage mobility reduces the persistence of wage inequality. We develop a framework to quantify the contribution of employer-to-employer movers to aggregate wage mobility. Using three decades of German social security data, we find that inequality increased while aggregate wage mobility decreased. Employer-to-employer movers exhibit higher wage mobility, mainly due to changes in employer wage premia at job change. The massive structural changes following German unification temporarily led to a high number of movers, which in turn boosted aggregate wage mobility. Wage mobility is much lower at the bottom of the wage distribution, and the decline in aggregate wage mobility since the 1980s is concentrated there. The overall decline can be mostly attributed to a reduction in wage mobility per mover, which is due to a compositional shift toward lower-wage movers.

We measure desired labour supply at the extensive (employment) margin in two representative surveys of the U.S. and German populations. We elicit reservation raises: the percent wage change that renders a given individual indifferent between employment and nonemployment. It is equal to her reservation wage divided by her actual, or potential, wage. The reservation raise distribution is the nonparametric aggregate labour supply curve. Locally, the curve exhibits large short-run elasticities above 3, consistent with business cycle evidence. For larger upward shifts, arc elasticities shrink towards 0.5, consistent with quasi-experimental evidence from tax holidays. Existing models fail to match this nonconstant, asymmetric curve.

We analyse the impact of robot adoption on employment composition using novel micro data on robot use in German manufacturing plants linked with social security records and data on job tasks. Our task-based model predicts more favourable employment effects for the least routine-task intensive occupations and for young workers, with the latter being better at adapting to change. An event-study analysis of robot adoption confirms both predictions. We do not find adverse employment effects for any occupational or age group, but churning among low-skilled workers rises sharply. We conclude that the displacement effect of robots is occupation biased but age neutral, whereas the reinstatement effect is age biased and benefits young workers most.

We revisit the employer size wage effect (ESWE) – arguably the most basic and influential departure from the law of one price for labor. Our main result is that this canonical fact disappears completely across establishments within the same firm, even though they operate in different local labor markets. We uncover and dissect this fact by including a firm fixed effect in otherwise standard cross-sectional regressions of wages on establishment size. We implement this demanding specification in population-wide triple-linked firm-establishment-employee data in Germany. This result is new in the ESWE literature (for which our paper also provides the first systematic meta-analysis). This wage-size decoupling is hard to square with the view that employment is determined along a finitely elastic employerspecific labor supply curve – i.e., employers pay exactly the minimum needed for the quantity of labor, but no more – the foundation of the monopsony view. By contrast, large multi-establishment firms (MEF) appear to hire off their labor supply curves (or those curves are very elastic), pay wage premia above the monopsonistic minimum, and leave excess labor supply. We find some evidence for a reemergence of the ESWE within low-premium MEFs. Overall, at least for the 25% of German employment in large firms for which the ESWE disappears, wage setting and employment determination may be better accounted for by alternative models, namely accommodating above-market-clearing wage premia and rationing of labor supply, such as efficiency wage theories.

This paper provides new causal evidence on how patent allowances affect firms and their employees based on quasi-random assignment of patent applications to examiners. Exploiting employer-employee records with newly linked German firm data and web-scraped patent documents, we show that patent-induced shocks reduce firm exit, improve productivity, and increase wages, with rent-sharing elasticities between 0.10 and 0.21. Wage gains are broadly observed across occupational tasks, with high heterogeneity: managers benefit disproportionately in publicly traded firms, whereas broader wage increases accrue to workers in non-traded firms. Our findings highlight the role of institutional features and firm organization in shaping how rents are shared.

We revisit the employer size wage effect (ESWE)—arguably the most basic and influential departure from the law of one price for labor. Our main result is that this canonical fact disappears completely across establishments within the same firm, even though they operate in different local labor markets. We uncover and dissect this fact by including a firm fixed effect in otherwise standard cross-sectional regressions of wages on establishment size. We implement this demanding specification in population-wide triple-linked firm-establishment-employee data in Germany. This result is new in the ESWE literature (for which our paper also provides the first systematic meta-analysis). This wage-size decoupling is hard to square with the view that employment is determined along a finitely elastic employer-specific labor supply curve—i.e., employers pay exactly the minimum needed for the quantity of labor, but no more—the foundation of the monopsony view. By contrast, large multi-establishment firms (MEF) appear to hire off their labor supply curves (or those curves are very elastic), pay wage premia above the monopsonistic minimum, and leave excess labor supply. We find some evidence for a reemergence of the ESWE within low-premium MEFs. Overall, at least for the 25% of German employment in large firms for which the ESWE disappears, wage setting and employment determination may be better accounted for by alternative models, namely accommodating above-market-clearing wage premia and rationing of labor supply, such as efficiency wage theories.

Spatial segregation of low- and high-wage workers is a persistent economic issue with broad social implications. Using social security data and an AKM wage decomposition, this paper examines spatial wage inequality in West Germany. Spatial inequality in log wages rose sharply between 1998 and 2008, mainly due to increased variance in worker pay premiums across regions (48%) and stronger positive spatial assortative matching of workers and establishments (40%), i.e. colocation. Changes in establishment wage premia are mostly unrelated to rising colocation whereas labor mobility even reduced it. Instead, growth in worker pay premiums among stayers was concentrated in regions where high-wage workers and high-wage establishments were overrepresented already in the 1990s and, thus, magnified pre-existing colocation leading to ‘colocation without relocation’. Germany’s rising trade surplus, especially with Eastern Europe, boosted stayers’ worker pay premiums in those ex-ante high-wage regions and fully explains rising colocation.

This paper analyzes the distribution and composition of pre-tax national income in Germany since 1992, combining personal income tax returns, household survey data, and national accounts. Inequality rose from the 1990s to the late 2000s due to falling labor incomes among the bottom 50% and rising incomes in the top 10%. This trend reversed after 2007 as labor incomes across the bottom 90% increased. The top 1% income share, dominated by business income, remained relatively stable between 1992 and 2019. A large share of Germany’s top 1% earners are non-corporate business owners in labor-intensive professions. At least half of the business owners in P99-99.9 and a quarter in the top 0.1% operate firms in professional services – a pattern mirroring the United States. From 1992 to 2019, Germany’s top 0.1% income concentration exceeded France’s and matched U.S. levels until the late 2000s.