Co-authors: Anton Cheremukhin
Affiliation:  Federal Reserve Bank of St. Louis
Date and time: Wednesday, October 14, 2026 14:30 (Santiago, GMT-3:00)
Location (Hybrid Seminar):

• Auditorio at the Central Bank of Chile, Morandé 115, second floor.
• Online meeting

Registration: seminarios@bcentral.cl

Abstract: We develop an information-based theory of monopsony power that unifies search frictions and job differentiation by endogenizing worker search and firm screening through rational inattention. The model yields a closed-form wage equation that decomposes the sources of monopsony power and nests directed and random search as limiting cases. The framework reconciles strong assortative matching with flat wage-productivity profiles, large wage markdowns with small firm wage effects, and high estimated labor supply elasticities with substantial monopsony power. Estimating the model on a matched employer-employee dataset, we find that firms drive sorting through selective screening while compressing wages toward workers’ outside option.