Labor Market Power and Development

Introduction. The relevance of the study lies in the fact that the spreading negative socio-economic phenomena of the Russian labor market, such as poverty of the working population, inequality in the income distribution, etc., intercept the reproduction of the labor force, reducing its quality and introducing undesirable structural changes. The reasons for the manifestation of negative socio-economic phenomena in the Russian labor market are based on the principles of imperfect competition in social and labor relations. Specifically, the social and labor relations of labor market subjects have no mutually beneficial basis and are most often aimed at satisfying the economic interests of the employers and infringing on the socio-economic interests of the employees, as well as the fact that the employees are required to have the manpower quality specifications that they lack or the employees have the manpower quality specifications that are not demanded by the employer, i.e. the labor market. The aim of the study is the quantitative assessment of the manifestation degree of imperfect competition in the Russian labor market with the possibility of predicting its spread to social and labor relations, with the subsequent development of conceptual solutions to regulate the imperfect competition in the Russian labor market. Materials and Methods. A set of methods of statistical and mathematical research is used for the purposes of this study. Mathematical modeling of imperfect competition is carried out by methods of probabilistic and vector analysis. The empirical study of imperfect competition is carried out by the method of statistical observation. Results. The result of mathematical modeling and statistical research of imperfect competition is the conclusion about the cyclical development of competition in the Russian labor market, where the cyclical change occurred in 2008 and 2016 and was largely determined by the general trend of the country's economic development and the ongoing crisis phenomena. Relatively sustainable development of competition is observed pertaining to a territorial feature, since there is almost no change in segment groups as a result of cyclical development of competition, which can be successfully interpreted as inertia (stagnation) in the development of competition. The set of measures taken by the state for the development of competitive processes in social and labor relations and regulation of the competitive environment in the Russian labor market is characterized by its insignificant impact on the segment structure and features of competitive processes and components of the competitive environment, as well as by the ineffectiveness of the implemented measures for government regulation. Discussion and Conclusion. The preservation and spread of the influence of the imperfect competitive processes and imperfect competitive conditions for the specified features and components are predicted in the Russian labor market. The use of quantitative indicators of imperfect competition is one of the methods for the performance evaluation of state regulation of imperfect competition in the Russian labor market.

How has labour market power evolved? Comparing labour market monopsony in Peru and the United States

he article deals with the multifactorial aspects of the labour market development as a special economic category: stages of development, impact of the economic crisis, trends during the pandemic, movement of employment and unemployment, etc. The analysis of the situation on the labour market, both in the whole world, and in the context of Russia and its subjects, is carried out. Trends in the development of the labour market are shown through the prism of global trends in economic development and the specifics of decision-making at the level of the Russian Federation since 1989, the period of transformation of its socio-economic development and entry into the world market. Much attention is paid to the situational response of the labour market to the global coronavirus pandemic in terms of analyzing the supply and demand of vacancies, salaries and their dynamics over the past year of the largest recruitment portal in the country. The risk sectors of the labour market development are shown for the territory of Russia as a whole, federal districts and subjects of the federation. The conclusion is made about sufficient decisions of the government of the Russian Federation in the pre-crisis period and forced anti-crisis actions during the pandemic in the conditions of long-term sanctions by key world actors. The measures necessary for the adoption of federal decisions to reduce the strain on the labour market in the long term, taking into account the reduction in the economy’s income, are outlined: closing more territories or sectors of the labor market to foreign labour, organizing jobs at real enterprises, optimizing the flow of domestic labour migration and new technological solutions in the economy

Firm Level Productivity Under Imperfect Competition in Output and Labor Markets

The Eures Cross-Border Partnership - An Important Means in the Development of the Labour Market in the Cross-Border Area

No one calls for totally free labour markets. There are good reasons for regulation. Most workers are dependent on their wage income, and working conditions are directly connected with living quality and safety. However, high and lasting unemployment in Europe is a clear sign that something is currently wrong with restricting competition in labour markets.

Existing structural analyses of the harmful effects of market consolidation focus on either product or labor markets in isolation, ignoring that product market competitors often compete for workers as well.This paper develops a unified framework for merger evaluation, finding that firms' simultaneous exercise of oligopoly power in the product market and oligopsony power in the labor market amplifies the harm from mergers to both consumers and workers.The model also demonstrates how merger-induced gains in labor market power incentivize firms to reduce product quality, highlighting an additional channel for consumer harm.The model's predictions are tested and quantified in the context of the recent consolidation of the US hospital industry.Linking panel data from several sources on all US hospitals from 1996-2022, a difference-in-differences design is estimated for nearly 150 high-concentration within-market mergers.Hospital mergers significantly reduce patient volume, increase prices, reduce employment, lower wages, and deteriorate quality of care, resulting in higher patient mortality.After recovering the structural parameters, the estimated model replicates observed merger impacts.Counterfactual exercises reveal that ignoring increased labor (product) concentration would lead one to under-predict the harm of mergers to consumers (workers).

Modern society is faced with the negative impact on the economies of population ageing, therefore there is an urgent need to develop a strategy for silver economy. A long-term strategy will help to avoid or to reduce the negative effects that are caused by population ageing, as well as to help to use opportunities that will have a positive effect on the development of the economy as a whole. One of the areas associated with the ageing population that needs to be developed is the labor market for the older workers. Due to increase of the retirement age as in Russia and as in other countries this topic is particularly relevant. Creating conditions of work, changing attitudes towards the elderly, their health, retraining, development of technologies that contribute to the improvement of the labor infrastructure are integral directions for strategic development. It is also necessary to pay attention to the specific vector of development of labor market, which is moving towards the automatization of technology and job cuts, which rather complicates the process of introducing the elderly to the labor market. All of the above areas should be considered when writing a long-term strategy for the development of a labor market for the elderly. The aim of the work is to identify existing trends in labor market for older workers in foreign countries and in Russia. The goal was achieved by analyzing international documents, scientific monographs, official data of state statistics of various countries, ministries of labor, health, internal affairs, and reports of international public organizations. The article discusses general demographic trends, the experience of using the labor potential of older people in Indonesia, Japan, the USA and Russia, reveals global strategic trends in the labor market for older people. The data reflect heterogeneity of attitudes towards older people in labor market in different countries. The rate of protection of elder from dismissal and discrimination is also multiple-valued. For the successful development of labor market and support of high quality of life, it is necessary to create a regulatory framework that will protect older employees, establish government policy and change the culture of perception of older people.

Using microeconomic tools, I discuss empirically economic factors that could play a role in generating markup heterogeneity across firms and sectors. In Chapter 2, we estimate markups following De Loecker and Warzynski (2012a) and discuss the role of financial frictions on markup adjustments at the firm level. To estimate financial frictions that are exogenous from the perspective of the firm following Amiti and Weinstein (2018) and Degryse, De Jonghe, Jakovljevic, Mulier and Schepens (2019). We find that firms that are more exposed to liquidity risks tend to raise markups in response to negative bank-loan supply shocks, while less exposed firms generally reduce them. We show that our findings are mostly consistent with models featuring a sticky customer base, where financially constrained firms have an incentive to raise markups to sustain liquidity. We find also that financial frictions add a countercyclical dimension in aggregate markup dynamics as predicted by this theoretical framework. In Chapter 3, we jointly estimate markups and workers' bargaining power across sectors by incorporating a Nash bargaining model between workers and firms in a production function following Roeger (1995), Crépon, Desplatz, Mairesse and Desplatz (2005), Dobbelaere (2004), Abraham, Konings and Vanormelingen (2009) and Dobbelaere and Mairesse (2013). Services are classified between tradable and non-tradable sectors according to their exposure to international trade measured as export-to-revenue ratios. Our findings suggest that around 1 in 5 service industries are in fact considered tradable. We find that exposure to international trade is likely to play a disciplining force in markups according to the pro-competitive models of international trade particularly in more exposed sectors. However, we find no effect of this disciplining effect on workers’ bargaining power when jointly considered. In Chapter 4, we document a fragmentation of the Single Market highlighting the role of potential barriers to trade, regulatory and institutional obstacles that prevent a reallocation of resources across firms and countries, equalizing prices and markups. Using firm-level data, we estimate markups and also relax the assumption of perfect competition in the labour market by incorporating a Nash bargaining negotiation between firms and workers in a production function following Roeger (1995), Crépon et al. (2005), Dobbelaere (2004), Abraham et al. (2009) and Dobbelaere and Mairesse (2013). Our findings suggest that perfect competition in both product and labour markets is widely rejected across sectors and that there are sizeable differences in the price cost margin and the workers’ bargaining power both within and across countries. In addition, we show that product and labour market imperfections are strongly positively correlated and that the market power of the firm is substantially underestimated by dismissing the degree of rent sharing with their workers. In Chapter 5 we empirically estimate the role of innovation in driving prices, markups, and firm efficiency and discuss to what extent can drive markup heterogeneity within an industry and act as a source of misallocation. In this Chapter, we estimate markups based on the main product of the firm, and back out marginal given that output prices are observed following the work of De Loecker, Goldberg, Khandelwal and Pavcnik (2016) based on a production estimation where R&D can potentially increase productivity (Doraszelski and Jaumandreu (2013). In addition, I compute TFPQ following the work of Foster, Haltiwanger and Syverson (2008), Bircan (2019) and De Loecker et al. (2016). We find that markups tend to rise persistently when firms innovate reflecting mainly a movement in output prices which drives up markup heterogeneity despite the pro-competitive effect of firm entry. This result is consistent with an increase in aggregate misallocation associated with this rise in markup dispersion.

Micro-mechanisms behind declining labor shares: Rising market power and changing modes of production

The article discusses mechanisms and models of state regulation of the labor market in Ukraine. The system of relations in the labor market is one of the most urgent directions of the socio-economic link of the state. The greatest influence on a state and dynamics of development of labor market provide socio-economic factors. The purpose of article is the research and assessment of the Ukrainian labor market, determine the socio-economic conditions for its development. It was noted not high position in a number of international rankings, a much higher level of remuneration in European countries than in Ukraine in recent years. It was analyzed the tendencies of labor migration of Ukrainian citizens under the conditions of European integration. Key problems in the development of the labor market in Ukraine include: low level of unemployment regulation, lack of clear structure of the labor market, insufficient number of jobs, lack of mechanisms for regulating the labor market, etc. It was investigated the main foreign models of regulation of employment and the labor market. It was considered the creation of a migration labor exchange to solve the problems of employment of Ukrainian citizens abroad. The implementation of this program will bring back into the labor market able-bodied unemployed citizens who already long time cannot find work in Ukraine and reduce the abuse associated with the shadow economy that does not declare their income. It was established that the effectiveness of solving the problems of the labor market and employment are substantially caused by state regulation. There are given the main directions of ensuring the efficiency of state management of the labor market of Ukraine on the basis of the conducted research of problems and tendencies of development, foreign experience. The directions include flexible employment policies at the national and regional levels, improving the system of continuing vocational education, creating appropriate legislation, promoting the development of the national economy and legalizing shadow employment.

Strategic priorities of world labor market development

Introduction. The processes of informatization of society, reform of state institutions and transformation of the economic system of Ukraine identify new problems and set new challenges for regulating the labor market and employment on the basis of public-private partnership, including by bringing to all labor market actors relevant information from verified sources. Given the signing of the Association Agreement with the European Union, Ukraine should take into account the experience of Eastern European countries that have been in similar transition conditions and have shown significant progress, in particular in overcoming the problems and threats in the labor markets that they have encountered in the process of European integration. Purpose and objectives. There is a necessity to justify the expediency of integration of information of subjects in the labor market of Ukraine for the purpose of formation of uniform information support of the labor market that will promote legal productive employment of citizens. Methodology. The article is based on international legal acts, laws and bylaws of Ukraine in the field of employment and regulation of labor market processes in the context of the functioning of a single information environment, formed on the basis of public-private partnership. Both general and special methods were used for the research: methods of analysis and synthesis, descriptive method, methods of induction and deduction. Results. The article analyzes the regulation of the European labor market by integrating the capabilities of national public employment services, the implementation of equal opportunities in free labor mobility for European workers. The data and experience of the countries of Eastern Europe are given. The institutional and legislative aspects of the functioning of private mediation in the domestic labor market are considered and it is proved that in Ukraine there is currently no regulatory influence of the state on the activities of private mediation in this market, and regulatory support in this area is imperfect. It is studied that information flows of private intermediaries, including job search and recruiting websites, operate independently of state intermediaries, and the public does not fully have up-to-date information on the state and needs of the domestic labor market. The article highlights the role of the government and the State Employment Service in the formation of information support of the labor market, compares the published data, provides relevant recommendations of the International Labor Organization and foreign experience. Conclusions. The information published in Ukraine by private labor market intermediaries needs full attention, as its connection with informal employment is not excluded. Given the impact of globalization challenges on the functioning and development of the domestic labor market, it is proposed to standardize the activities of private labor market intermediaries, including job search and recruiting websites, by including their data on labor supply and demand in the domestic labor market. For Ukraine, the experience of the European countries in cooperation between public and private intermediaries in the labor market, based on the creation of single information support of the labor market, including through joining the EURES system, is relevant.

The higher education market portends to be a huge market in the future that traditional systems of delivery of services will be insufficient. This paper proposes a model that links two (2) global markets: the higher education market and the labor market, as dramatic changes are taking place in the 21st century. A modeling and simulation strategy has been employed in this paper predicting the impact of higher education market to the labor market. Results indicated that with the rapid expansion of the Higher Education(HE) market, the size of the higher education labor force will inevitably expand.The labor market tolerates a maximum expansion capacity for HE graduates beyond which the excess HE graduates will bifurcate into two (2) channels of productive sector, namely: (a) the creation of new economies or (b) the integration of HE graduates into the skilled labor force. This dynamics necessarily yields a highly fragmented labor force configuration. In essence, the evolution of the labor market is a replica of Darwin’s Biological Theory of Evolution where only the fittest will survive, i.e. evolution through mutation and adaptation whose equivalent concepts in this setting are “innovation” and “adaptation” respectively. It is well-established in Evolutionary Biology that “mutation” is the shortest-route to evolution and so we posit that “innovation” is the shortest route to the labor market evolutionary ladder.Therefore, a good university must be able to produce graduates who are innovative and adaptive at the same time to survive in a competitive labor market.

Relevance: In an era of rapid digital transformation, the labor market in Kazakhstan faces new challenges and opportunities. This research explores the development of the labor market in the context of Kazakhstan's digital economy, with a focus on sustainable development principles. Background: The authors have identified nine scientific schools that can be applied to investigate the development of the labor market in Kazakhstan's digital economy within the framework of sustainable development. Digital transformation is a key focus in this context, as it impacts the economy, society, and the labor market. Methods: The study draws on the principles and approaches of these nine scientific schools to analyze the development of the labor market in Kazakhstan. This includes examining initiatives such as Digital Kazakhstan and various international digital transformation efforts. Results: The authors find that digital transformation initiatives in different countries share common goals, such as enhancing the competitiveness, innovation, and productivity of the manufacturing sector while addressing workforce development and creating new job opportunities. The Digital Kazakhstan initiative also follows these goals, aiming to improve the country's economic competitiveness through digital transformation. Conclusion: By considering the nine scientific schools and their applications, a deeper understanding of the labor market's development in Kazakhstan can be achieved in the context of digital transformation and sustainable development. The authors recommend that Kazakhstan focuses on key areas such as education, workforce development, innovation, entrepreneurship, digital infrastructure, industry-academia collaboration, targeted strategies for key industries, public-private partnerships, supportive regulatory frameworks, social inclusion, sustainability, and international cooperation to successfully develop its labor market and ensure sustainable growth.