Monopsonistic Labour Markets and the Gender Pay Gap: Theory and Empirical Evidence

ISBN-13: 9783642104084 / Angielski / Miękka / 2010 / 280 str.

Boris Hirsch

Opis

1. 1 Wage Setting vs. Wage Taking Inhisground-breakingmonographMonopsonyin Motion: Imperfect Competitionin Labor Markets, Manning (2003a, p. 3) starts his argument in favour of a monop- nistic approach to labour market phenomena with a compelling case against perfect competition: What happens if an employer cuts the wage it pays its workers by one cent? Much of labor economics is built on the assumption that all existing workers immediately leave the rm as that is the implication of the assumption of perfect competition in the labor market. Taking the model literally, this would indeed be its prediction. Other than in a perfectly competitive labour market where employers are wage takers unable to deviate from the market wage, a monopsonistic approach assumes that employers possess signi cant wage-setting power and actually ex- cise their market power. Put differently, it argues that some of the workers stay with the rm, giving the rm some discretionin wage setting. Technically speaking, the main difference between the two models is that under perfect competition the laboursupply faced by the rm is in nitely elastic, whereas this doesnot hold under 1 monopsony. While Manningis right in stating that the modelof a perfectlycompetitivelabour market still dominates teaching and considerable parts of labour economics, there are of course notable exceptions, for instance, the ef ciency wage (e. g., Schlicht, 1978; Salop, 1979a; Shapiro and Stiglitz, 1984; Yellen, 1984), the search and eq- librium unemployment (e. g."

Spis treści

Spatial Monopsony.- Simple Static Monopsony.- Short-Run Spatial Monopsony.- Long-Run Spatial Monopsony.- Spatial Monopsony and the Gender Pay Gap.- Spatial Monopsony and Regional Differences in the Gender Pay Gap.- Dynamic Monopsony.- Simple Dynamic Monopsony.- A General Equilibrium Model of Dynamic Monopsony.- Dynamic Monopsony and the Gender Pay Gap.- Concluding Remarks.

Blurb

This book investigates models of spatial and dynamic monopsony and their application to the persistent empirical regularity of the gender pay gap. Theoretically, the main conclusion is that employers possess more monopsony power over their female employees if women are less driven by pecuniary considerations in their choice of employers than men. Employers may exploit this to increase their profits at the detriment of women’s wages. Empirically, it is indeed found that women’s labour supply to the firm is less wage-elastic than men’s and that at least a third of the gender pay gap in the data investigated may result from employers engaging in monopsonistic discrimination. Therefore, a monopsonistic approach to gender discrimination in the labour market clearly contributes to the economic understanding of the gender pay gap. It not only provides an intuitively appealing explanation of the gap from standard economic reasoning, but it is also corroborated by empirical observation.