MONOPSONY IN MOTION. Alan Manning IMPERFECT COMPETITION IN LABOR MARKETS PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD

Transcription

1 MONOPSONY IN MOTION IMPERFECT COMPETITION IN LABOR MARKETS Alan Manning PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD

2 Contents Preface xi PART ONE: BASICS 1 1 Introduction ^ The Advantages of a Monopsonistic Perspective Objections to Monopsony and Oligopsony Monopsony or Matching or Both? Antecedents Summary of Chapters and Main Results 19 2 Simple Models of Monopsony and Oligopsony Static Partial Equilibrium Models of Monopsony A Simple Model of Dynamic Monopsony A Generalized Model of Monopsony A General Equilibrium Model of Oligopsony Perfect Competition and Monopsony A Simple Measure of Monopsony Power Positive and Normative Aspects of Monopsony and 49 Oligopsony 2.8 Implications and Conclusions 50 Appendix Efficiency in Oligopsonistic Labor Markets Free Entry of Firms Endogenous Recruitment Activity Elasticity in Labor Supply: Free Entry of Workers Elasticity in Labor Supply: Heterogeneity in 64 Reservation Wages 3.5 Heterogeneity in Reservation Wages and 65 Free Entry of Firms 3.6 Multiple Equilibria in Models of Oligopsony: 66 An Application to Ghettoes 3.7 Conclusions 69 Appendix The Elasticity of the Labor Supply Curve to an 80 Individual Firm 4.1 The Employer Size-Wage Effect 81

3 viii CONTENTS 4.2 Competing Explanations for the Employer 84 Size-Wage Effect 4.3 Reverse Regressions Estimating Models of Dynamic Monopsony Estimating the Wage Elasticity of Separations The Proportion of Recruits from Employment The Elasticity of the Labor Supply Curve Facing the Firm The Estimation of Structural Equilibrium Search Models 106 of the Labor Market 4.9 Conclusions ^ 107 Appendix 4A 108 Appendix 4B 111 PART TWO: THE STRUCTURE OF WAGES The Wage Policies of Employers The Discriminating Monopsonist Non-Manipulable Wage Discrimination Empirical Evidence Conclusions 136 Appendix Earnings and the Life Cycle The Earnings Losses of Displaced Workers Sample Selection in the Cross-Sectional Earnings Profile The Cross-Sectional Returns to Experience and Tenure 152 in a Job-Shopping Model 6.4 Empirical Approaches to the Estimation of the Life- 163 Cycle Profile in Earnings 6.5 Estimating the Return to Job Mobility The Life-Cycle Profile of Earnings for Older Men Conclusions 179 Appendix 6A 180 Appendix 6B Gender Discrimination in Labor Markets The Gender Pay Gap Monopsony and the Gender Pay Gap The Elasticity in Labor Supply to the Firm and the 198 Market 7.4 Money and Motivation Gender Differences in the Returns to Job Mobility Gender Differences in the Wage Elasticity of Separations 206

4 CONTENTS 7.7 Human Capital Explanations of the Gender Pay Gap The Effect of UK Equal Pay Legislation Prejudice and Monopsony Conclusions Employers and Wages Explaining the Correlations between Employer 218 Characteristics and Wages 8.2 Monopsony and Compensating Wage Differentials Choice of Working Conditions Mandated Benefits Hours of Work Conclusion 234 Appendix PART THREE: LABOR DEMAND AND SUPPLY Unemployment, Inactivity, and Labor Supply Endogenizing Job Search Activity Unemployment and Inactivity The Job Search of the Employed Quits Involuntary Unemployment Efficiency Wages and Monopsony Conclusions 264 Appendix Vacancies and the Demand for Labor The Interpretation of Vacancy Statistics Filling Vacancies The Technology of Matching: Random versus Balanced 284 Matching 10.4 Empirical Evidence on Random and Balanced Matching Estimating the Labor Cost Function Lay-Offs Conclusions 297 Appendix Human Capital and Training Acquiring Education Employer-Provided General Training On-the-Job Specific Training Empirical Analyses of Training Conclusion 318 Appendix IX

5 X CONTENTS PART FOUR: WAGE-SETTING INSTITUTIONS AND 323 CONCLUSIONS 12 The Minimum Wage and Trade Unions The Minimum Wage and the Distribution of Wages: 325 Spikes and Spillovers 12.2 The Minimum Wage and Changes in US Wage 333 Inequality 12.3 The Minimum Wage and Employment Models of Trade Unions Trade Unions and Wages Conclusions 354 Appendix 12 A 355 Appendix 12B Monopsony and the Big Picture The Sources of Monopsony Power A Sense of Perspective Monopsony and Labor Market Policy Future Directions Conclusions 367 Data Sets Appendix 368 United States 368 United Kingdom 374 Bibliography 379 Index 397