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DTSTART:20070311T020000
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DTSTAMP:20241031T102821
DTSTART;TZID=America/Detroit:20241106T143000
DTEND;TZID=America/Detroit:20241106T155000
SUMMARY:Workshop / Seminar:Collusion Among Employers in India
DESCRIPTION:This paper evidences collusion among employers in the textile and clothing manufacturing industry in India. First\, I develop a simple comparative static test to distinguish standard forms of imperfect competition from collusion. I show that\, for very general labor supply and production structures\, the spillover effects of firm-specific demand shocks predict opposite employment effects at unshocked competitors who operate independently (↓ employment)\, versus those who were previously colluding but whose collusion dismantles due to the shock (↑ employment). Next\, I argue that large employers in the garment industry organize into industry associations to pay workers exactly the state- and industry-specific minimum wage\, using it as a focal point for coordination. Members of industry associations are substantially more likely to bunch from above at the local minimum wage than non-members\, and to track its policy-induced rise without reducing employment. I show that small export demand shocks evoke the standard imperfectly competitive response among non-members (higher wages and employment)\, but elicit no response from members (they forego export opportunities to stick to the minimum wage). By contrast\, when a large demand shock leads affected members to deviate from the minimum wage\, unaffected nonmembers respond as in oligopsony (↑ wage\, ↓ employment)\, but unaffected members respond as if their collusion dismantles (↑ wage\, ↑ employment). Imposing specific models of labor supply and production\, the “full-IO” approach statistically rejects the oligopsony model in favor of the breakdown of collusion. I conclude that collusion spurs substantial losses even compared to a world wherein each firm exercises its own\, but not their collective\, market power\, reducing the average worker’s wage by 9.6% and employment by 17%.
UID:125900-21856259@events.umich.edu
URL:https://events.umich.edu/event/125900
CLASS:PUBLIC
STATUS:CONFIRMED
CATEGORIES:Economics,Labor,seminar
LOCATION:Lorch Hall - 201
CONTACT:
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