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Estimating the Firm's Labor Supply Curve in a "New Monopsony" Framework: Schoolteachers in Missouri

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  • Michael R Ransom
  • David P. Sims

Abstract

In the context of certain dynamic models, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. Using this property, we estimate the average labor supply elasticity to public school districts in Missouri. We leverage the plausibly exogenous variation in prenegotiated district salary schedules to instrument for actual salary. These estimates imply a labor supply elasticity of about 3.7, suggesting that school districts possess significant market power. The presence of monopsony power in this teacher labor market may be partially explained by its institutional features. (c) 2010 by The University of Chicago. All rights reserved..

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 28 (2010)
Issue (Month): 2 (04)
Pages: 331-355

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Handle: RePEc:ucp:jlabec:v:28:y:2010:i:2:p:331-355

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Cited by:
  1. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2013. "Monopsony Power, Pay Structure, and Training," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 66(5), pages 1097-1114, October.
  2. Ahrens, Steffen & Snower, Dennis J., 2012. "Envy, Guilt, and the Phillips Curve," CEPR Discussion Papers 8796, C.E.P.R. Discussion Papers.
  3. Depew, Briggs & Sørensen, Todd A., 2013. "The elasticity of labor supply to the firm over the business cycle," Labour Economics, Elsevier, vol. 24(C), pages 196-204.
  4. Alan Manning, 2010. "Imperfect Competition in the Labour Market," CEP Discussion Papers dp0981, Centre for Economic Performance, LSE.
  5. Douglas Webber, 2011. "Firm Market Power and the Earnings Distribution," Working Papers 11-41, Center for Economic Studies, U.S. Census Bureau.
  6. Depew, Briggs & Norlander, Peter & Sorensen, Todd A., 2013. "Flight of the H-1B: Inter-Firm Mobility and Return Migration Patterns for Skilled Guest Workers," IZA Discussion Papers 7456, Institute for the Study of Labor (IZA).

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