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Firm-Level Monopsony and the Gender Pay Gap

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  • Webber, Douglas A.

    ()
    (Temple University)

Abstract

Using a dynamic labor supply model and linked employer-employee data, I find evidence of substantial search frictions, with females facing a higher level of frictions than males. However, the majority of the gender gap in labor supply elasticities is driven by across firm sorting rather than within firm differences, a feature predicted in the search theory literature, but which has not been previously documented. The gender differential in supply elasticities leads to 3.3% lower earnings for women. Roughly 60% of the elasticity differential can be explained by marriage and children penalties faced by women but not men.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7343.

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Length: 32 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7343

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Keywords: monopsony; discrimination;

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  1. Hirsch, B.T. & Schumacher, E.J., 1993. "Monopsony Power and Relative Wages in the Labor Market for Nurses," Working Papers 1993_06_03, Department of Economics, Florida State University.
  2. Muehlemann, Samuel & Pfeifer, Harald & Walden, G√ľnter & Wenzelmann, Felix & Wolter, Stefan C., 2010. "The financing of apprenticeship training in the light of labor market regulations," Labour Economics, Elsevier, vol. 17(5), pages 799-809, October.
  3. Adamache, Killard W. & Sloan, Frank A., 1982. "Unions and hospitals : Some unresolved issues," Journal of Health Economics, Elsevier, vol. 1(1), pages 81-108, May.
  4. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2010. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 291-330, 04.
  5. Depew, Briggs & Sorensen, Todd A., 2011. "Elasticity of Supply to the Firm and the Business Cycle," IZA Discussion Papers 5928, Institute for the Study of Labor (IZA).
  6. Douglas Webber, 2011. "Firm Market Power and the Earnings Distribution," Working Papers 11-41, Center for Economic Studies, U.S. Census Bureau.
  7. Bonin, Holger & Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Labour Economics, Elsevier, vol. 14(6), pages 926-937, December.
  8. Charles R. Link & Russell F. Settle, 1979. "Labor Supply Responses of Married Professional Nurses: New Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 14(2), pages 256-266.
  9. Daniel Sullivan, 1989. "Monopsony Power in the Market for Nurses," NBER Working Papers 3031, National Bureau of Economic Research, Inc.
  10. Martin Bronfenbrenner, 1956. "Potential monopsony in labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 9(4), pages 577-588, July.
  11. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  12. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-33, April.
  13. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, March.
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Cited by:
  1. Hirsch, Boris & Jahn, Elke J. & Schnabel, Claus, 2013. "The cyclical behaviour of employers' monopsony power and workers' wages," Discussion Papers 89, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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