Bidding for Talent: A Test of Conduct in a High-Wage Labor Market
Working Paper 33848
DOI 10.3386/w33848
Issue Date
We develop a procedure for adjudicating between models of firm wage-setting conduct. Using data from a U.S. job search platform, we propose a methodology to aggregate workers’ choices over menus of jobs into rankings of firms’ non-wage amenities. We use these estimates to formulate a test of conduct based on exclusion restrictions. Oligopsonistic models incorporating strategic interactions between firms and tailoring of wage offers to workers’ outside options are rejected in favor of monopsonistic models featuring near-uniform markdowns. Misspecification has meaningful consequences: our preferred model predicts average markdowns of 19.5%, while others predict average markdowns as large as 26.6%.