Monopsony Power, Pay Structure and Training

36 Pages Posted: 28 Mar 2011

See all articles by Samuel Muehlemann

Samuel Muehlemann

University of Bern

Paul Ryan

University of London - Faculty of Social Science and Public Policy

Stefan C. Wolter

Swiss Coordination Centre for Research in Education (SKBF); University of Bern - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2011

Abstract

Although interest in monopsonistic influences on labour market outcomes has revived in recent years, only a few empirical studies provide direct evidence on it. This paper analyses empirically the effect of monopsony power on pay structure, using a direct measure of labour market 'thinness.' We find that having fewer competitors for skilled labour is associated at the level of the establishment with lower pay for both skilled labour and trainees, but not for unskilled labour. These findings have potentially important implications for the economic theory of training, as most recent models assume that skilled pay is set monopsonistically but both unskilled and trainee pay are determined competitively. Our results support those assumptions for skilled pay and unskilled pay, but not for trainee pay.

Keywords: monopsony, wage differentials, firm-sponsored training

JEL Classification: J24, J31, J42

Suggested Citation

Mühlemann, Samuel and Ryan, Paul and Wolter, Stefan C., Monopsony Power, Pay Structure and Training (March 1, 2011). IZA Discussion Paper No. 5587. Available at SSRN: https://ssrn.com/abstract=1796582

Samuel Mühlemann (Contact Author)

University of Bern ( email )

Gesellschaftstrasse 49
Bern, CH-3012
Switzerland

Paul Ryan

University of London - Faculty of Social Science and Public Policy ( email )

London, SE1 9NN
United Kingdom

Stefan C. Wolter

Swiss Coordination Centre for Research in Education (SKBF) ( email )

CH - 5000 Aarau
Switzerland
+41 62 835 23 90 (Phone)
+41 62 835 23 99 (Fax)

HOME PAGE: http://www.skbf-csre.ch

University of Bern - Department of Economics ( email )

Gesellschaftstrasse 49
Bern, CH-3012
Switzerland
+41 31 631 40 95 (Phone)
+41 31 631 39 92 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
44
Abstract Views
465
PlumX Metrics