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CEP/STICERD Applications Seminars

Power and Dignity in the Low-Wage Labor Market: Theory and Evidence from Walmart Workers

Arindrajit Dube (University of Massachusetts), joint with Suresh Naidu and Adam Reich

Monday 23 May 2022 16:00 - 17:30

Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events. Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

About this event

We present a survey-based methodology for estimating employer market power and worker valuations of job amenities. We discuss a simple model of a monopsonistic employer choosing wages jointly with non-wage working conditions. We show that a distinctive prediction of monopsony is that just-binding minimum wages are not offset by lowered workplace characteristics that are complementary with wages. To implement our methodology, we draw on in-depth interviews conducted with 87 Walmart workers to design and implement a survey experiment with over 10,000 Walmart workers recruited online. Using responses to hypothetical outside offers and link click-through rates, we find a quit elasticity of roughly 2, consistent with other recent research showing monopsony power in the low-wage labor market. Motivated by the ethnographic evidence, we expand the set of amenities to include subjective experiences of supervisor respect and fairness, self-expression on the job, and reliable co-workers, which we jointly call "workplace dignity", following a large sociological literature. We find that workers value workplace dignity at approximately six percent of their current wage, comparable to amenities like commute time and more valuable than widely discussed amenities like control over one’s schedule, general skills, or physical exertion. Second, we use geographic variation in the bite of Walmart’s 2014 voluntary minimum wage policy to estimate the causal impact of higher wages on amenities. Consistent with both employer market power and wage-amenity complementarities, we find that the subjective experience of work does not become worse when wages are increased as a result of the voluntary minimum wage. We can rule out declines in valued experiences of work smaller than 10\% of the increase in wages caused by the voluntary minimum wage. We conclude that the interaction of employer market power with worker's valuations of respect and fairness at work imply that large low-wage employers may under-supply both wages and job amenities, including workplace dignity.

Applications (Applied Micro) Seminars are held on Mondays in term time at 12:00-13:30 in SAL 3.05 in person.

Seminar organiser: Maitreesh Ghatak

For further information please contact Sadia Ali:

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