Horng Chern Wong

Research

WORKING PAPERS

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

Conditionally accepted @ American Economic Review

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.

Urban-Biased Structural Change (with Natalie Chen, Dennis Novy, & Carlo Perroni) [Updated: December 2025]

Abstract: Using French micro-data, we show that rapid structural transformation in densely populated cities is driven by the expansion of large tradable services firms and the departure of large manufacturing firms. This reallocation is accompanied by sharply rising house prices but without a compensating increase in urban nominal wages. Using a quantitative spatial equilibrium model, we highlight the role that local consumption services play in reconciling these facts. We show that structural change leads to an expansion of local services varieties, which improves amenities and moderates urban wage growth despite rising house prices. By containing labor costs, this mechanism allows large, urban-centered tradable services firms to capitalize on their fast productivity growth. As a result, the forces underlying urban-biased structural change have facilitated the rise of superstar services firms and have increased the urban-rural welfare gap, even though conventional statistics point in the opposite direction.

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.)