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CATEGORIES:Seminar,Class/ Workshop
DESCRIPTION:Ben Scuderi\n\nMarket Definition Bias in Studies of (Labor) Mar
 ket Power\n\nAbstract: This paper demonstrates two distinct and quantitativ
 ely important biases introduced by using an “incorrect" definition of marke
 t boundaries when attempting to make inferences about labor market power.  
 The first source of bias\, long recognized in the antitrust literature\, st
 ems from mismeasurement of relative firm size: the same firm will appear ar
 tificially dominant when markets are drawn too narrowly and artificially co
 mpetitive when they are drawn too broadly.  We derive a novel second source
  of bias\, which we term elasticity bias\, that generates statistical atten
 uation of estimates of key parameters that govern model-based conclusions a
 bout the size and distribution of markdowns across employers and markets. I
 n simulations calibrated to Brazilian administrative data\, we show that th
 e second channel is an order of magnitude more important than the first.  F
 urther\, we show that market definition bias can be large in empirically-re
 levant cases where the relative rate of misclassification may be modest\, a
 s with administrative labor-market boundaries such as industry/occupation-r
 egion cells adopted by virtually all existing studies. We propose an altern
 ative network-based procedure for defining labor market boundaries that ext
 ends the algorithm of Fogel and Modenesi (2022). Drawing upon the empirical
  strategy of Felix (2022)\, we show that relative to using administrative m
 arket definitions\, using network-based market definitions yields estimates
  with 40% larger markdown dispersion and overturns several qualitative conc
 lusions about which workers are harmed by monopsony power. Finally\, we pro
 pose a simple diagnostic that allows practitioners to pick among off-the-sh
 elf classifications when using a data-driven one is infeasible.
DTEND:20260323T165500Z
DTSTAMP:20260416T120346Z
DTSTART:20260323T154000Z
GEO:42.447319;-76.480995
LOCATION:Ives Hall\, 105
SEQUENCE:0
SUMMARY:Labor Economics Workshop:  Ben Scuderi
UID:tag:localist.com\,2008:EventInstance_52064169798652
URL:https://events.cornell.edu/event/labor-economics-workshop-ben-scuderi
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