If there's only one big employer in town, marginalized workers don't just get lower pay—they're the ones most likely to lose their jobs.
SSRN · March 18, 2026 · 6416116
The Takeaway
While 'company towns' are usually associated with low wages for trapped workers, this study found that dominant employers actually slash hiring for people with the fewest outside options, like women and low-skilled laborers. This suggests that employer power acts as a job-killer for vulnerable populations rather than just an excuse to underpay them.
From the abstract
<div> <p>While imperfect competition in labor markets allows firms to set wages below the marginal revenue product, the adjustment margins through which employer market power impacts workers remain poorly understood. In theory, oligopsonistic employers may extract surplus not only by depressing wages but also by distorting labor supply decisions, affecting employment and hours worked differently across workers with heterogeneous labor supply elasticities.</p> <p>This paper examines how employer