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A Generalised Model of Monopsony

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  • Alan Manning

Abstract

This article presents a general but very simple model in which the supply of labour to an individual employer is not infinitely elastic but the employer can also raise employment by increasing expenditure on recruitment. Using this, it is shown how that division between perfect competition and monopsony is whether there are diseconomies of scale in recruitment. Using a unique British data set containing information on both labour turnover costs and the number of recruits we present estimates that do suggest that there is an increasing marginal cost of recruitment. Copyright 2006 Royal Economic Society.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 116 (2006)
Issue (Month): 508 (01)
Pages: 84-100

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Handle: RePEc:ecj:econjl:v:116:y:2006:i:508:p:84-100

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References

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  1. Stephen Nickell & Glenda Quintini, 2003. "Nominal wage rigidity and the rate of inflation," Economic Journal, Royal Economic Society, vol. 113(490), pages 762-781, October.
  2. Simon Burgess & H Turon, 2000. "Unemployment Dynamics, Duration and Equilibrium: Evidence from Britain," CEP Discussion Papers dp0474, Centre for Economic Performance, LSE.
  3. Patricia Tracy Jones & Stephen Nickell & Glenda Quintini, 2000. "A Picture of Job Insecurity Facing British Men," CEP Discussion Papers dp0479, Centre for Economic Performance, LSE.
  4. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
  5. Douglas Staiger & Joanne Spetz & Ciaran Phibbs, 1999. "Is There Monopsony in the Labor Market? Evidence from a Natural Experiment," NBER Working Papers 7258, National Bureau of Economic Research, Inc.
  6. Stephen Nickell & John Van Reenen, 2001. "Technological Innovation and Performance in the United Kingdom," CEP Discussion Papers dp0488, Centre for Economic Performance, LSE.
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Cited by:
  1. Gabriel J. Felbermayr & Giammario Impullitti & Julien Prat, 2014. "Firm Dynamics and Residual Inequality in Open Economies," CESifo Working Paper Series 4666, CESifo Group Munich.
  2. Gerda Dewit & Dermot Leahy, 2005. "Oligopsonistic Cats and Dogs," Economics, Finance and Accounting Department Working Paper Series n1590905, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  3. Felbermayr, Gabriel & Larch, Mario & Lechthaler, Wolfgang, 2012. "Endogenous labor market institutions in an open economy," Munich Reprints in Economics 20600, University of Munich, Department of Economics.
  4. Mühlemann, Samuel & Pfeifer, Harald, 2013. "The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data," IZA Discussion Papers 7656, Institute for the Study of Labor (IZA).
  5. Dube, Arindrajit & Freeman, Eric & Reich, Michael, 2010. "Employee Replacement Costs," Institute for Research on Labor and Employment, Working Paper Series qt7kc29981, Institute of Industrial Relations, UC Berkeley.
  6. Alan Manning, 2010. "Imperfect competition in the labour market," LSE Research Online Documents on Economics 28729, London School of Economics and Political Science, LSE Library.
  7. Blatter, Marc & Muehlemann, Samuel & Schenker, Samuel, 2012. "The costs of hiring skilled workers," European Economic Review, Elsevier, vol. 56(1), pages 20-35.
  8. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2011. "Monopsony power, pay structure and training," Economics of Education Working Paper Series 0099, University of Zurich, Institute for Strategy and Business Economics (ISU).
  9. George Karatzas, 2009. "On the origin and the literal meaning of monopsony: a note," International Review of Economics, Springer, vol. 56(4), pages 425-430, December.
  10. Jan Rouwendal & Jos van Ommeren, 2007. "Recruitment in a Monopsonistic Labour Market: Will Travel Costs be reimbursed?," Tinbergen Institute Discussion Papers 07-044/3, Tinbergen Institute, revised 03 Sep 2008.
  11. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
  12. Samuel Muehlemann & Harald Pfeifer & Felix Wenzelmann, 2013. "The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data," Economics of Education Working Paper Series 0095, University of Zurich, Institute for Strategy and Business Economics (ISU).
  13. Blatter, Marc & Mühlemann, Samuel & Schenker, Samuel & Wolter, Stefan C., 2012. "Hiring Costs of Skilled Workers and the Supply of Firm-Provided Training," IZA Discussion Papers 6344, Institute for the Study of Labor (IZA).

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