China Journal of Economics

2025, v.12;No.47(03) 208-230

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The Evolution and Influencing Factors of Labor Market Monopsony in China's Manufacturing Sector——Based on the Production Function Approach

Jiping Chen;Chuliang Luo;Dandan Zhang;

Abstract:

Using the production function approach, this paper examines the evolution and determinants of labor market monopsony in China's manufacturing sector. We find that monopsony power slightly declined from 2008 to 2016 in China. There are significant variations in its magnitude and trends across industries and ownership types, and monopsony power across cities shows a clear convergence trend. By 2016, the wage markdown in China's manufacturing sector was 1.98, meaning that for every 1 yuan of revenue generated, workers received nearly 0.5 yuan in return, indicating that labor income remains relatively disadvantaged. Moreover, firm's monopoly power significantly reduces its monopsony power, whereas firm size, capital-labor ratio, and productivity significantly increase it. Additionally, we find that monopsony power lowers firm's labor income share by reducing both employment and wages.

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Foundation: 国家自然科学基金青年项目“行业垄断与国民收入分配失衡:微观机制和改善路径研究”(批准号:72403175);; 国家社科基金项目“以高质量充分就业促进共同富裕的路径与策略研究”(批准号:23VRC010);; 北京市教育委员会科研计划项目资助(批准号:SM202410038007)的资助

Authors: Jiping Chen;Chuliang Luo;Dandan Zhang;

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