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Gender Differences in Labor Supply to Monopsonistic Firms: An Empirical Analysis Using Linked Employer-Employee Data from Germany

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Author Info

  • Hirsch, Boris

    ()
    (University of Erlangen-Nuremberg)

  • Schank, Thorsten

    ()
    (University of Mainz)

  • Schnabel, Claus

    ()
    (University of Erlangen-Nuremberg)

Abstract

This paper investigates women's and men's labor supply to the firm within a structural approach based on a dynamic model of new monopsony. Using methods of survival analysis and a linked employer-employee dataset for Germany, we find that labor supply elasticities are small (0.9-2.4) and that women's labor supply to the firm is substantially less elastic than men's (which is the reverse of gender differences in labor supply usually found at the level of the market). One implication of these findings is that the gender pay gap could be the result of wage discrimination by profit-maximizing monopsonistic employers.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2443.

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Length: 27 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2443

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Keywords: discrimination; labor supply; monopsony; gender;

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References

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  1. Campbell, Carl M, III, 1993. "Do Firms Pay Efficiency Wages? Evidence with Data at the Firm Level," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 11(3), pages 442-70, July.
  2. Alda, Holger, 2005. "Datenbeschreibung der Version 2.0 des LIAB-Längsschnittmodells (LIAB Longitudinal Model Version 2.0 -Data Description)," FDZ Datenreport. Documentation on Labour Market Data, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 200508_de, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  3. Erling Barth & Harald Dale-Olsen, 1999. "Monopsonistic Discrimination and the Gender-Wage Gap," NBER Working Papers 7197, National Bureau of Economic Research, Inc.
  4. Audra J. Bowlus & Zvi Eckstein, 2002. "Discrimination and Skill Differences in an Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1309-1345, November.
  5. Alan Manning, 2010. "Imperfect competition in the labour market," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 28729, London School of Economics and Political Science, LSE Library.
  6. Green, Francis & Machin, Stephen & Manning, Alan, 1996. "The Employer Size-Wage Effect: Can Dynamic Monopsony Provide an Explanation?," Oxford Economic Papers, Oxford University Press, vol. 48(3), pages 433-55, July.
  7. Hirsch, Barry T. & Schumacher, Edward J., 2005. "Classic or new monopsony? Searching for evidence in nursing labor markets," Journal of Health Economics, Elsevier, Elsevier, vol. 24(5), pages 969-989, September.
  8. Ransom, Michael R. & Oaxaca, Ronald L., 2005. "Sex Differences in Pay in a "New Monopsony" Model of the Labor Market," IZA Discussion Papers 1870, Institute for the Study of Labor (IZA).
  9. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, June.
  10. Arntz, Melanie, 2005. "The Geographical Mobility of Unemployed Workers: Evidence from West Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 05-34, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  12. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(1), pages 86-112, March.
  13. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
  14. Alda, Holger & Bender, Stefan & Gartner, Hermann, 2005. "The linked employer-employee dataset of the IAB (LIAB)," IAB Discussion Paper 200506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  15. Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(2), pages 155-174, Spring.
  16. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 026203316x, December.
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Cited by:
  1. Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2009. "Employer monopsony power in the labor market for undocumented workers," Working Paper, Federal Reserve Bank of Atlanta 2009-14, Federal Reserve Bank of Atlanta.
  2. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2008. "Undocumented worker employment and firm survivability," Working Paper, Federal Reserve Bank of Atlanta 2008-28, Federal Reserve Bank of Atlanta.
  3. Anja Heinze & Elke Wolf, 2010. "The intra-firm gender wage gap: a new view on wage differentials based on linked employer–employee data," Journal of Population Economics, Springer, Springer, vol. 23(3), pages 851-879, June.
  4. Briggs Depew & Peter Norlander & Todd A. Sorensen, . "Inter-Firm Mobility and Return Migration Patterns of Skilled Guest Workers," Departmental Working Papers, Department of Economics, Louisiana State University 2014-06, Department of Economics, Louisiana State University.
  5. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2013. "Does Employing Undocumented Workers Give Firms A Competitive Advantage?," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 53(1), pages 158-170, 02.
  6. Depew, Briggs & Sørensen, Todd A., 2013. "The elasticity of labor supply to the firm over the business cycle," Labour Economics, Elsevier, Elsevier, vol. 24(C), pages 196-204.

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