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

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Author Info
Boris Hirsch (University of Erlangen-Nurnberg)
Thorsten Schank (University of Erlangen-Nurnberg)
Claus Schnabel (University of Erlangen-Nurnberg and IZA)

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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 large linked employer-employee dataset for Germany, we find that labor supply elasticites are small (1.9-3.7) and the women's labor supply to the firm is less elastic than men's (which is the reverse of gender differences in labor supply usually found at the level of the market). Our results imply that about one third of the gender pay gap might be wage discrimination by profit-maximizing monopsonistic employers.

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Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 1111.

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Date of creation: Dec 2008
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Handle: RePEc:pri:indrel:1111

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Related research
Keywords: labor supply; monopsony; gender; gender pay gap; discrimination; monopsony papers;

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Find related papers by JEL classification:
J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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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.:
  1. Usui, Emiko, 2009. "Wages, non-wage characteristics, and predominantly male jobs," Labour Economics, Elsevier, vol. 16(1), pages 52-63, January. [Downloadable!] (restricted)
  2. Hirsch, Barry T. & Schumacher, Edward J., 2005. "Classic or new monopsony? Searching for evidence in nursing labor markets," Journal of Health Economics, Elsevier, vol. 24(5), pages 969-989, September. [Downloadable!] (restricted)
  3. Bowlus, A.J. & Eckstein, Z., 1998. "Discrimination and Skill Differences in an Equilibrium Search Model," Papers 04-98, Tel Aviv.
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  4. Postel-Vinay, Fabien & Robin, Jean-Marc, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," CEPR Discussion Papers 3548, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. Winkelmann, Rainer & Zimmermann, Klaus F, 1998. "Is Job Stability Declining in Germany? Evidence from Count Data Models," Applied Economics, Taylor and Francis Journals, vol. 30(11), pages 1413-20, November. [Downloadable!] (restricted)
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  6. Arntz, Melanie, 2005. "The Geographical Mobility of Unemployed Workers : Evidence from West Germany," ZEW Discussion Papers 05-34, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  7. 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, vol. 11(3), pages 442-70, July. [Downloadable!] (restricted)
  8. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March. [Downloadable!] (restricted)
  9. Bowlus, Audra J, 1997. "A Search Interpretation of Male-Female Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 625-57, October. [Downloadable!] (restricted)
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  10. Abbring, Jaap H & van den Berg, Gerard J, 2007. "The Unobserved Heterogeneity Distribution in Duration Analysis," CEPR Discussion Papers 6219, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. V. Bhaskar & Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring. [Downloadable!] (restricted)
  12. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460 Elsevier. [Downloadable!] (restricted)
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  13. Erling Barth & Harald Dale-Olsen, 1999. "Monopsonistic Discrimination and the Gender-Wage Gap," NBER Working Papers 7197, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  1. Hirsch, Boris & Schank, Thorsten & Schnabel, Claus, 2009. "Works Councils and Separations: Voice, Monopoly, and Insurance Effects," IZA Discussion Papers 4126, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Jeremy T. Fox, 2009. "Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers," Working Papers 1113, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
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