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Abstract

We suggest that firms in a local labour market may be able to exploit worker mobility costs and offer immobile workers wages that are lower than their marginal product. If so, the ability of employers to exploit worker immobility in setting wages would decline in the competitiveness of the local labour market. We test this intuition using a measure of individual mobility costs and measures of local labour market competition. Our findings suggest that worker immobility causes substantial wage variation across workers in small, weakly competitive markets, and in occupations where wages are individually bargained.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 1 (January)
Pages: 230-239

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Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:230-239

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Wages Local labour markets Oligopsonistic competition Geographic mobility Mobility costs;

References

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1. Peter Dorman & Paul Hagstrom, 1998. "Wage compensation for dangerous work revisited," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(1), pages 116-135, October.
2. Bartel, Ann P, 1979. "The Migration Decision: What Role Does Job Mobility Play?," American Economic Review, American Economic Association, vol. 69(5), pages 775-86, December.
3. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March.
4. Martin Bronfenbrenner, 1956. "Potential monopsony in labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 9(4), pages 577-588, July.
5. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
6. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier.
   
   • Joseph G. Altonji & Rebecca M. Blank, . "Race and Gender in the Labor Market," IPR working papers 98-18, Institute for Policy Resarch at Northwestern University.
7. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
8. V. Bhaskar & Ted To, 1996. "Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition," Labor and Demography 9603001, EconWPA, revised 21 May 1996.
   
   • Bhaskar, V & To, Ted, 1999. "Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition," Economic Journal, Royal Economic Society, vol. 109(455), pages 190-203, April.
9. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-73, October.
10. Santerre, Rexford E & Neun, Stephen P, 1986. "Stock Dispersion and Executive Compensation," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 685-87, November.
11. Alan B. Krueger & Lawrence H. Summers, 1987. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
12. Bhaskar, V. & Manning, A. & To, T., 2002. "Oligopsony and monopsonistic competition in labor markets," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
    
    • Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring.
13. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, April.
14. Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, vol. 78(1), pages 89-107, March.
15. Sandell, Steven H, 1977. "Women and the Economics of Family Migration," The Review of Economics and Statistics, MIT Press, vol. 59(4), pages 406-14, November.
16. James Luizer & Robert Thornton, 1986. "Concentration in the labor market for public school teachers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 573-584, July.
17. Stuart Dorsey & Norman Walzer, 1983. "Workers' compensation, job hazards, and wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 36(4), pages 642-654, July.

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Cited by:

1. Michaelides, Marios, 2009. "The effect of local ties, wages, and housing costs on migration decisions," MPRA Paper 20379, University Library of Munich, Germany.
   
   • Michaelides, Marios, 2011. "The effect of local ties, wages, and housing costs on migration decisions," The Journal of Socio-Economics, Elsevier, vol. 40(2), pages 132-140, April.

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