Description:

Garima Sharma (MIT): "Monopsony and Gender".

Abstract: I investigate the role of labor market power in driving the gender wage gap in Brazil. Exploiting firm-level shocks induced by the end of the Multi-Fiber Arrangement, I show that women are substantially less likely than men to separate from their employer following a wage cut. The ensuing gender difference in monopsony power would explain 42% of the gender wage gap (an 18pp difference). To probe the source of higher monopsony power over women, I develop and estimate a discrete choice model featuring two explanations: women strongly prefer their specific employer (horizontal difference) or have fewer good employers (vertical difference). Of the 18pp gender gap due to monopsony, I estimate 10pp as attributable to the former and 8pp to the concentration of good jobs for women in the textile sector. This concentration in turn reflects amenities/disamenities present in different sectors and not gender-specific comparative advantage: specifically, eliminating gender gaps in productivity across sectors erodes 4pp of the monopsony gender gap whereas leveling amenities entirely erodes the 8pp gap due to concentration. My findings demonstrate that although the textile industry provides women desirable jobs, this desirability confers its employers with higher monopsony power. By contrast, desirable jobs for men are not similarly concentrated.