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Do employers have more monopsony power in slack labor markets?

Title data

Hirsch, Boris ; Jahn, Elke ; Schnabel, Claus:
Do employers have more monopsony power in slack labor markets?
In: IRL Review. Vol. 71 (2018) Issue 3 . - pp. 676-704.
ISSN 2162-271X
DOI: https://doi.org/10.1177/0019793917720383

Abstract in another language

This article confronts monopsony theory’s predictions regarding workers’ wages with observed wage patterns over the business cycle. Using German administrative data for the years 1985 to 2010 and an estimation framework based on duration models, the authors construct a time series of the labor supply elasticity to the firm and estimate its relationship to the unemployment rate. They find that firms possess more monopsony power during economic downturns. Half of this cyclicality stems from workers’ job separations being less wage driven when unemployment rises, and the other half mirrors that firms find it relatively easier to poach workers. Results show that the cyclicality is more pronounced in tight labor markets with low unemployment, and that the findings are robust to controlling for time-invariant unobserved worker or plant heterogeneity. The authors further document that cyclical changes in workers’ entry wages are of similar magnitude as those predicted under pure monopsonistic wage setting.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: monopsony power; business cycle; wage cyclicality
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Labour Economics > Chair Labour Economics - Univ.-Prof. Dr. Elke Jahn
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Labour Economics
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 16 Mar 2018 07:39
Last Modified: 15 Sep 2022 12:35
URI: https://eref.uni-bayreuth.de/id/eprint/42881