This paper studies how firms' labor market power affects the pricing of aggregate risk. I develop a production-based asset pricing model with hand-to-mouth workers who consume wages and shareholders who consume dividends. Workers' preferences over employers give firms wage-setting power, generating a wage markdown that determines how output and aggregate risk are divided between workers and shareholders. When productivity rises, higher worker income reduces sensitivity to wage differences across employers, allowing firms to widen the markdown and shift more of the productivity gain toward dividends. I estimate the markdown's response to productivity using simulated method of moments and the comovement of the U.S. labor share with productivity and output. A 1% productivity increase raises the estimated markdown by approximately 0.32%. In the model, a constant markdown raises the price of risk from 0.19 under competition to 0.29, while allowing the markdown to respond to productivity raises it further to 0.42. The latter generates an annual levered equity premium of 4.2%, compared with 6.8% in the data. The mechanism operates through the greater exposure of shareholder consumption to persistent productivity shocks.

This paper studies how minimum wage increases affect labor force participation, focusing on Turkey's 2016 minimum wage reform, which raised the real minimum wage by approximately 20%. Using administrative data from 81 Turkish cities and a difference-in-differences approach, I exploit regional differences in how strongly the new minimum wage affected local labor markets. I find that cities more exposed to the increase experienced simultaneous rises in formal employment and registered unemployment. A 10 percentage point increase in minimum-wage exposure is associated with a 6.9% increase in female formal employment and a 2.7% increase in male formal employment, alongside increases in registered unemployment for both groups. The effects are particularly pronounced for women, who were more exposed to the minimum wage before the reform. The joint increase in employment and unemployment is consistent with a labor force participation response. Drawing on a search-and-matching framework with endogenous participation, I show how higher minimum wages can encourage previously inactive individuals to enter the labor market by increasing the expected returns to job search.