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Monopsony Power, Pay Structure, and Training

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  • Samuel Muehlemann
  • Paul Ryan
  • Stefan C. Wolter

Abstract

Although interest in monopsonistic influences on labor market outcomes has revived in recent years, only a few empirical studies provide direct evidence on this topic. In this article, the authors analyze the effect of monopsony power on pay structure, using a direct measure of labor market thinness. The authors find evidence of monopsony power, as firms facing fewer local competitors offer lower wages to skilled labor and trainees, but not to unskilled labor. The findings have important implications for the economic theory of training, as most recent models assume monopsonistic pay-setting for skilled labor, but not for trainees.

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 66 (2013)
Issue (Month): 5 (October)
Pages: 1097-1114

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Handle: RePEc:ilr:articl:v:66:y:2013:i:5:p:1097-1114

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References

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Citations

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Cited by:
  1. Paul Ryan, 2011. "Apprenticeship: between theory and practice, school and workplace," Economics of Education Working Paper Series 0064, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Oct 2011.
  2. Paul Ryan & Uschi Backes-Gellner & Silvia Teuber & Karin Wagner, 2012. "Apprentice pay in Britain, Germany and Switzerland: institutions, market forces, market power," Economics of Education Working Paper Series 0075, University of Zurich, Institute for Strategy and Business Economics (ISU).
  3. Fries, Jan & Göbel, Christian & Maier, Michael F., 2013. "Do employment subsidies reduce early apprenticeship dropout?," ZEW Discussion Papers 13-053, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Anika Jansen & Mirjam Strupler Leiser & Felix Wenzelmann & Stefan C. Wolter, 2012. "The effect of labor market regulations on training behavior and quality: the German labor market reform as a natural experiment," Economics of Education Working Paper Series 0083, University of Zurich, Institute for Strategy and Business Economics (ISU).

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