Horng Chern Wong

Research

PUBLICATIONS

Understanding High-Wage Firms: Monopoly, Monopsony, and Bargaining Power 

American Economic Review, vol. 116, no. 7, July 2026 [Journal link]

Abstract: I study how firm market power and worker bargaining power shape wages and welfare. Using French micro-data, I document patterns linking wages and firm market power that existing models cannot explain. A model in which firms produce vertically differentiated goods and share profits with workers explains those patterns. The model (a) reveals new challenges in estimating monopsony and bargaining power, proposing an alternative approach; (b) shows that the passthrough of firm-specific shocks to wages depends on the type of shock; (c) explains how markups shape firm wage premia; and (d) formalizes how strengthening worker bargaining power affects wages and welfare.

WORKING PAPERS

Skill-Biased Technological Change Across Firms (with Anders Åkerman and Sampreet Goraya) 

Abstract: Does skill-biased technological change benefit less-skilled workers? This paper shows that who gains or loses from SBTC depends on where it occurs across firms and how widely it diffuses across markets. Using Swedish administrative microdata, we document that large firms became increasingly important in the market for skilled labor between 1997 and 2018. Relative to smaller firms, they grew more skill intensive and paid rising skill premia; this steepening reflected a rising large-firm wage premium for college workers but not for non-college workers. We interpret these facts through a model of heterogeneous firms with wage- and price-setting power. The quantified model infers that SBTC became increasingly concentrated among large firms. This concentration raises productivity, but widens wage inequality within and between firms. It can also lower low-skill wages and employment at the firms where SBTC occurs, with negative spillovers to low-skilled workers at competitors. The mechanism is that large firms have weaker scale responses to skill-biased shocks, limiting the expansion that would otherwise offset substitution away from low-skilled labor. Removing firm market power mitigates these losses, but does not overturn them. By contrast, broader diffusion of SBTC across industries can turn those losses into gains for low-skilled workers.

Urban-Biased Structural Change (with Natalie Chen, Dennis Novy, & Carlo Perroni) [Updated: April 2026]

Abstract: Using French micro-data, we document that between 1995 and 2018 the rise of tradable services disproportionately favored dense cities, especially through the expansion of large tradable-services firms and the relative decline of large manufacturing firms. These changes were accompanied by sharply rising urban house prices but no compensating increase in urban nominal wages. Using a quantitative spatial equilibrium model, we show that the interaction of firm sorting and endogenous local-service variety can explain these patterns. In the model, tradable-services growth reallocates activity toward dense cities, where large tradable-services firms are more strongly concentrated. The induced expansion of local-service variety then raises urban amenities and moderates nominal wage growth, allowing those firms to expand further despite rising housing costs. As a result, spatial welfare gaps widen even though conventional indicators based on wages and house prices substantially understate the change.

The Labor Market Consequences of Acquisitions (with Jakob Beuschlein and Jósef Sigurdsson) [Updated: February 2026]

Abstract: We study the effects of corporate acquisitions on workers using Swedish administrative data and document substantial, persistent earnings losses following acquisitions. These losses reflect both displacement and wage cuts among stayers from target firms. We find no evidence that increased monopsony power accounts for these wage cuts. Instead, they are concentrated in acquisitions where the acquiring-firm CEO sat on the board of the target prior to the transaction. Such acquisitions increase acquiring-firm profits and CEO pay, without affecting total employment or revenue, consistent with rent redistribution. Overall, acquisitions reduce wages and disrupt employment, with profit gains partly extracted from workers.

Media: ProMarket | RFBerlin Research Insights | Flamman | Mitteldeutscher Rundfunk 

Rising Misallocation and Declining Business Dynamism (with Anders Åkerman) [Updated: March 2026]

Abstract: Declining business dynamism has become a salient feature of many advanced economies. We apply a recent growth-accounting framework to Swedish microdata and provide new evidence linking rising input misallocation to declining business dynamism and a smaller contribution of input reallocation to productivity growth. Startup and exit rates have fallen, high-growth young firms have become less common, and employer-to-employer mobility has weakened over the past two decades. Over the same period, dispersion in firm-level distortions increased. Our most novel evidence is at the sector level: sectors with larger increases in distortion dispersion experienced sharper declines in business dynamism. The most distorted firms are more productive, pay higher wages, employ more skilled workers, are more export-oriented, and are more concentrated in dense cities, yet they are no larger in employment than the least distorted firms, suggesting that distortions increasingly constrain the expansion of productive firms. A growth-accounting exercise indicates that the contribution of input reallocation to productivity growth has diminished over time. The evidence from manufacturing is consistent with a greater role for product market power, but this mechanism alone cannot explain the broader rise in measured distortions.

POLICY REPORTS

SNS report: Svensk produktivitet: Hur väl används våra produktionsresurser? [Swedish productivity: How well are our production resources used?] (with Anders Åkerman)

Academic paper: Rising Misallocation and Declining Business Dynamism

Media: Dagens Industri | Svenska Dagbladet | VD tidningen

Teaching

2022 - present: Labor IV (Ph.D.) 

2024 - present: Topics in International Trade (Ph.D.)

2022 - present: International Economics (B.Sc.)