Oligopsony and Monopsonistic Competition in Labor Markets

Bhaskar, V.; Manning, Alan; To, Ted

doi:10.1257/0895330027300

Cited by 308 publications

(260 citation statements)

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“…He also discusses in detail how competing theories can explain the same facts, and in which respects the monopsony model is to be preferred as a likely explanation. 4 Most studies are referred to the US and the UK, typical examples of decentralised wage setting labour markets. This paper tries to …ll a little gap in the literature by considering …rst order predictions of the monopsony-search model using Italian labour market data, where wage bargaining agreements are centralised with strong union presence with no space left for employers'wage policies (Teulings and Hartog, 1998).…”

Section: Introductionmentioning

confidence: 99%

What can monopsony explain of the gender wage differential in Italy?

Sulis

2011

International Journal of Manpower

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PurposeThis paper seeks to study gender wage differentials in Italy using first‐order predictions of monopsony‐search models. It compares empirical predictions of these models against other competing ones of wage determination in non‐competitive settings.Design/methodology/approachThe paper looks at the empirical relevance of the model in terms of third degree wage discrimination among men and women by estimating the labour supply elasticity to the individual firm. It also tests the monopsony model using a “natural” experiment. Italian administrative longitudinal data from INPS are used.FindingsWomen have lower elasticity of labour supply to the individual firm: employer size regressions indicate larger effects (and consequently lower elasticity) for women as predicted by the monopsony model. Using the theoretical dynamic monopsony‐search model of Burdett and Mortensen, wage elasticity of separations and recruits confirm this result. Using relative men/women employment effects resulting from institutional changes in wage indexation mechanism (Scala Mobile), it is found that relative male employment responded differently in the two periods to the exogenous relative increase in the wage differential, as predicted by the monopsony model. Search frictions explain about 50 per cent of the gender differential.Research limitations/implicationsNo role for discrimination. Better controls for rents and union status would be needed. More rich firm data would be needed.Originality/valueThe paper is one of the few attempts of testing implications of monopsony models in unionised labour markets, such as Italy, after some important reforms in wage bargaining agreements. The change in institutional agreements is an interesting test for different theories of wage determination.

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Section: Introductionmentioning

confidence: 99%

What can monopsony explain of the gender wage differential in Italy?

Sulis

2011

International Journal of Manpower

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“…They report large increases in real wages of the privatised firms while overall real wages throughout Mexico stagnated. 1 In addition, they asked firms why they increased worker's pay. Interestingly, "matching the conditions offered by similar firms" was listed as an important reason for the increase in wages after privatisation.…”

Section: Introductionmentioning

confidence: 99%

From public monopsony to competitive market: more efficiency but higher prices

Delfgaauw¹,

Dur²

2008

Oxford Economic Papers

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper examines the consequences of creating a fully competitive market in a sector previously dominated by a cost-minimising public firm. Workers in the economy are heterogeneous in their motivation to work in the sector. In line with empirical findings, our model implies that firms in the competitive market provide stronger monetary incentives to workers, reach higher productivity, and employ less workers than the public firm. Allocative efficiency therefore increases. Nevertheless, prices of the sector's output rise as competition between private firms for the best motivated workers leads to higher wage cost than under the public monopsony. Political support for liberalisation may therefore be limited. Terms of use: Documents in EconStor mayJEL Classification: H4, J3, J4, L2, L3, L5.

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“…I provide examples of existing tax and transfer programs later on that use information on wage rates and labour hours alongside earnings. 8 As in the neoclassical textbook model-and contrary to the current paper-minimum wages decrease employment in both papers.…”

Section: Introductionmentioning

confidence: 65%

“…2 As a …rst contribution I show that a small binding minimum wage always increases employment, even if it destroys desirable low performance jobs. The relationship be- 1 Positive employment e¤ects of minimum wages are usually obtained by introducing imperfect competition (Bhaskar, Manning, and To, 2002 for an overview), imperfect information (Manning, 1995, and Rebitzer and Taylor, 1995), or search frictions (Burdett andMortensen, 1998, Flinn, 2006, and Ahn, Arcidiacono, and Wessels, 2011). 2 Wage rates are endogenous via the choice of e¤ort.…”

Section: Introductionmentioning

confidence: 99%

“…Both papers assume a rationing mechanism-e¢ cient rationing in Lee and Saez (2012) and general rationing in Gerritsen and Jacobs (2014)-whereas in this paper e¢ cient rationing follows automatically from the choices that individuals make. 8 In addition, the underlying reason why minimum wages can be useful is di¤erent. In Lee and Saez (2012) minimum wages allow for more redistribution to subsidized low income workers by blocking other potential 6 Allen (1987) shows that minimum wages add no value to (i ) an optimal non-linear earnings tax scheme (ii ) absent other policy instruments in (iii ) a competitive labour market where (iv ) individuals choose along the intensive (labour e¤ort) margin.…”

Section: Introductionmentioning

confidence: 99%

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