If labour markets are competitive, migration can only affect native wages via marginal products. But under imperfect competition, migration may also increase wage mark-downs – if firms have greater monopsony power over migrants than natives, but cannot perfectly wage-discriminate. While marginal products depend on relative labor supplies across skill cells, mark-downs depend on migrant concentration within them. This insight can help rationalise empirical violations of canonical migration models. Using US data, we conclude that mark-downs grow: this increases aggregate native income, but redistributes it from workers to firms. Policies which constrain monopsony power over migrants can mitigate these adverse wage effects.
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Amior et al. (2025) studied this question.
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