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Monopsony Power, Pay Structure and Training

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  • Mühlemann, Samuel

    ()
    (University of Munich)

  • Ryan, Paul

    ()
    (King's College Cambridge)

  • Wolter, Stefan C.

    ()
    (University of Bern)

Abstract

Although interest in monopsonistic influences on labour market outcomes has revived in recent years, only a few empirical studies provide direct evidence on it. This paper analyses empirically the effect of monopsony power on pay structure, using a direct measure of labour market 'thinness'. We find that having fewer competitors for skilled labour is associated at the level of the establishment with lower pay for both skilled labour and trainees, but not for unskilled labour. These findings have potentially important implications for the economic theory of training, as most recent models assume that skilled pay is set monopsonistically but both unskilled and trainee pay are determined competitively. Our results support those assumptions for skilled pay and unskilled pay, but not for trainee pay.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5587.

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Length: 36 pages
Date of creation: Mar 2011
Date of revision:
Publication status: published in: Industrial and Labor Relations Review, 2013, 66 (5), 1095-1112
Handle: RePEc:iza:izadps:dp5587

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Keywords: firm-sponsored training; wage differentials; monopsony;

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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. 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).
  4. 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.

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