The Plant Size-Place Effect: Agglomeration and Monopsony in Labour Markets
AbstractThis paper shows, using data from both the US and the UK, that average plant size is larger in denser markets. However, many popular theories of agglomeration - spillovers, cost advantages and improved match quality - predict that establishments should be smaller in cities. The paper proposes a theory based on monopsony in labour markets that can explain the stylized fact - that firms in all labour markets have some market power but that they have less market power in cities. It also presents evidence that the labour supply curve to individual firms is more elastic in larger markets.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0773.
Date of creation: Jan 2007
Date of revision:
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Agglomeration; Labour Markets; Monopsony;
Other versions of this item:
- Alan Manning, 2010. "The plant size-place effect: agglomeration and monopsony in labour markets," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 717-744, September.
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-31 (All new papers)
- NEP-BEC-2007-03-31 (Business Economics)
- NEP-GEO-2007-03-31 (Economic Geography)
- NEP-LTV-2007-03-31 (Unemployment, Inequality & Poverty)
- NEP-URE-2007-03-31 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- L. Rachel Ngai & Roberto M. Samaniego, 2006.
"An R&D-Based Model of Multi-Sector Growth,"
CEP Discussion Papers
dp0762, Centre for Economic Performance, LSE.
- Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2006.
"Multi-Product Firms and Trade Liberalization,"
CEP Discussion Papers
dp0769, Centre for Economic Performance, LSE.
- Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2006. "Multi-Product Firms and Trade Liberalization," NBER Working Papers 12782, National Bureau of Economic Research, Inc.
- Stephen J Redding & Peter K Schott & Andrew B Bernard, 2007. "Multi-product Firms and Trade Liberalization," 2007 Meeting Papers 44, Society for Economic Dynamics.
- Andrew Bernard & Stephen Redding & Peter Schott, 2009. "Multi-Product Firms and Trade Liberalization," Working Papers 09-21, Center for Economic Studies, U.S. Census Bureau.
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