Sex Differences in Pay in a 'New Monopsony' Model of the Labor Market

28 Pages Posted: 8 Dec 2005

See all articles by Michael R. Ransom

Michael R. Ransom

Brigham Young University - Department of Economics; IZA Institute of Labor Economics

Ronald L. Oaxaca

University of Arizona - Department of Economics; IZA Institute of Labor Economics

Date Written: December 2005

Abstract

We use a simple framework, adopted from general equilibrium search models, to estimate the extent to which monopsony power (or labor market frictions) can account for gender differences in pay, using data from a chain of regional grocery stores. In this framework, the elasticity of labor supply to the firm can be inferred from estimates of the elasticity of the separation rate with respect to the wage. We identify elasticities of separation from differences in wages and separation rates across job titles and across different years. We estimate elasticities of labor supply to the firm of about 3.5 for men and about 2.7 for women, suggesting significant wage-setting power for the firm. The differences in estimated elasticities of labor supply predict wage differences that are close to the observed male/female wage differences at the firm.

Keywords: monopsony, gender, discrimination

JEL Classification: J42, J71

Suggested Citation

Ransom, Michael R. and Oaxaca, Ronald L., Sex Differences in Pay in a 'New Monopsony' Model of the Labor Market (December 2005). Institute for the Study of Labor Discussion Paper No. 1870. Available at SSRN: https://ssrn.com/abstract=869002

Michael R. Ransom (Contact Author)

Brigham Young University - Department of Economics ( email )

130 Faculty Office Bldg.
Provo, UT 84602-2363
United States
801-422-4736 (Phone)
801-422-0194 (Fax)

HOME PAGE: http://fhss.byu.edu/econ/ransom/

IZA Institute of Labor Economics

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

Ronald L. Oaxaca

University of Arizona - Department of Economics ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States
520-621-4135 (Phone)
520-621-8450 (Fax)

IZA Institute of Labor Economics

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

Register to save articles to
your library

Register

Paper statistics

Downloads
150
Abstract Views
1,411
rank
194,412
PlumX Metrics