Year: 2025
Type: article
Abstract: “Superstar firms” can be large and successful without necessarily exploiting market power over labor markets (Autor et al., Quarterly Journal of Economics 2020; 135(2):645–709). In this paper, we examine this idea in an agricultural labor market setting by studying the empirical relationship between employment surplus, which is essentially the excess of a worker's value of marginal product over their wage, and wages. We use a model of search, match, and bargaining that explains how the surplus from worker's productivity is split between workers and employers. Our estimates show that workers' mean productivity is $8.67 per hour, and they receive 24.2% of employment surplus, but both exhibit substantial heterogeneity over workers. Heterogeneity in productivity and bargaining power suggests that workers who are able to generate “a bigger pie” may also earn a larger share of it. Consistent with this notion, our analysis shows a robust positive elasticity of surplus with observed wages, implying that agricultural firms gain more (surplus) by paying their workers higher wages and not necessarily through exploitation or “winner‐take‐all” strategy.
DOI: 10.1002/aepp.13526
Authors: Ujjwol Paudel, Timothy J. Richards
Institution: Arizona State University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4409831438