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Monopsony in Movers: The Elasticity of Labor Supply to Firm Wage Policies

Monopsony in Movers: The Elasticity of Labor Supply to Firm Wage Policies <p>ABSTRACT:</p><p>We estimate the impact of the firm component of hourly wage variation on separations from matched Oregon employer–employee data. We use both firm fixed effects estimated from a wage equation as well as a matched instrumental variable (IV) event study around employment transitions between firms. Separations decline with firm wage policies: the implied firm-level labor supply elasticities are around 4, consistent with recent quasi-experimental evidence, but three to four times larger than existing estimates using individual wages. We find that monopsonistic competition is pervasive, even in low-wage, high-turnover sectors, but with little heterogeneity by labor market concentration.</p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Human Resources University of Wisconsin Press

Monopsony in Movers: The Elasticity of Labor Supply to Firm Wage Policies

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Publisher
University of Wisconsin Press
Copyright
Copyright © Board of Regents of the University of Wisconsin System
ISSN
1548-8004

Abstract

<p>ABSTRACT:</p><p>We estimate the impact of the firm component of hourly wage variation on separations from matched Oregon employer–employee data. We use both firm fixed effects estimated from a wage equation as well as a matched instrumental variable (IV) event study around employment transitions between firms. Separations decline with firm wage policies: the implied firm-level labor supply elasticities are around 4, consistent with recent quasi-experimental evidence, but three to four times larger than existing estimates using individual wages. We find that monopsonistic competition is pervasive, even in low-wage, high-turnover sectors, but with little heterogeneity by labor market concentration.</p>

Journal

Journal of Human ResourcesUniversity of Wisconsin Press

Published: Mar 29, 2022

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