Monopsony power in migrant labor markets: Evidence from the United Arab Emirates

Suresh Naidu, Yaw Nyarko, Shing Yi Wang

Research output: Contribution to journalArticlepeer-review

Abstract

By exploiting a reform in the United Arab Emirates that relaxed restrictions on employer transitions, we provide new estimates of the monopsony power of firms over migrant workers. Our results show that the reform increased incumbent migrants’ earnings and firm retention. This occurs despite an increase in employer transitions and is driven by a fall in country exits. While the outcomes of incumbents improved, the reform decreased demand for new migrants and lowered their earnings. These results are consistent with a model of monopsony in which firms face upward-sloping labor supply curves for both new recruits in source countries and incumbent migrants.

Original languageEnglish (US)
Pages (from-to)1735-1792
Number of pages58
JournalJournal of Political Economy
Volume124
Issue number6
DOIs
StatePublished - Dec 2016

ASJC Scopus subject areas

  • Economics and Econometrics

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