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The Employer Size-Wage Effect: Can Dynamic Monopsony Provide an Explanation?

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Author Info
Green, Francis
Machin, Stephen
Manning, Alan

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Abstract

In this paper, the authors argue that a dynamic monopsony model, based on labor market frictions, predicts a positive relationship between wages and employer size, but also that the effect will be larger in the nonunion sector than in the union sector and larger for women than for men. They examine evidence on the employer size-wage effect using several microeconomic data sources and find it to be generally consistent with these predictions. After examining other theoretical explanations, their conclusion is that at least part of the employer size-wage effect is a result of monopsony power in the labor market. Copyright 1996 by Royal Economic Society.

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Publisher Info
Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 48 (1996)
Issue (Month): 3 (July)
Pages: 433-55
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Handle: RePEc:oup:oxecpp:v:48:y:1996:i:3:p:433-55

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  1. Erling Barth & Harald Dale-Olsen, 2005. "Employer Size or Skill-Group Size Effect on Wages?," IZA Discussion Papers 1888, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Bernd Görzig & Martin Gornig & Axel Werwatz, 2006. "East Germany’s Wage Gap: A non-parametric decomposition based on establishment characteristics," SFB 649 Discussion Papers SFB649DP2006-044, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
    Other versions:
  3. Lixin Cai & C. Jeffrey Waddoups, 2008. "Union Wage Effects in Australia: Evidence from Panel Data," CEPR Discussion Papers 585, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  4. Thierry Lallemand & Robert Plasman & François Rycx, 2007. "The establishment-size wage premium: evidence from European countries," Empirica, Springer, vol. 34(5), pages 427-451, December. [Downloadable!] (restricted)
    Other versions:
  5. Bill Collier, 2000. "The UK Wage Curve: New Evidence from the British Household Panel Survey," Studies in Economics 0010, Department of Economics, University of Kent. [Downloadable!]
  6. Giovanni Sulis, 2007. "What Can Monopsony Explain of the Gender Wage Differential in Italy?," Working Paper CRENoS 200713, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  7. Geraint Johnes, 2003. "Curriculum," Working Papers 000231, Lancaster University Management School, Economics Department. [Downloadable!]
  8. Bernd Görzig & Martin Gornig & Axel Werwatz, 2006. "Firm Specific Wage Spread in Germany - Decomposition of regional differences in inter firm wage dispersion," SFB 649 Discussion Papers SFB649DP2006-045, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  9. Clive R. Belfield & Xiangdong Wei, 2004. "Employer size-wage effects: evidence from matched employer-employee survey data in the UK," Applied Economics, Taylor and Francis Journals, vol. 36(3), pages 185-193, February. [Downloadable!] (restricted)
  10. Alan Carruth & Bill Collier & Andy Dickerson, 1999. "Inter-industry Wage Differences and Individual Heterogeneity: How Competitive is Wage Setting in the UK?," Studies in Economics 9914, Department of Economics, University of Kent. [Downloadable!]
  11. Susan Harkness, 1996. "The gender earnings gap: evidence from the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 17(2), pages 1-36, May. [Downloadable!]
  12. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2006. "Gender Differences in Labor Supply to Monopsonistic Firms: An Empirical Analysis Using Linked Employer-Employee Data from Germany," IZA Discussion Papers 2443, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  13. Barth, Erling & Bratsberg, Bernt & Naylor, Robin A. & Raaum, Oddbjørn, 2002. "Explaining Variations in Wage Curves: Theory and Evidence," Memorandum 03/2002, Oslo University, Department of Economics. [Downloadable!]
  14. Donal O'Neill, 2000. "Evaluating Labour Market Interventions," Economics, Finance and Accounting Department Working Paper Series n990300, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth. [Downloadable!]
  15. Andrew Benito, . "Does job insecurity affect household consumption?," Bank of England working papers 220, Bank of England. [Downloadable!]
    Other versions:
  16. BERND GÖRZIG & MARTIN GORNIG & AXEL WERWATZ, 2005. "Explaining Eastern Germany's Wage Gap: The Impact of Structural Change," Post-Communist Economies, Taylor and Francis Journals, vol. 17(4), pages 449-464, December. [Downloadable!] (restricted)
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