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Oligopsony and the Distribution of Wages

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Author Info

  • V. Bhaskar

    (University of Essex)

  • Ted To

    (University of Warwick)

Abstract

A number of theories (search and efficiency wages) have been developed, in part, to explain why identically able workers are often paid different wages. However, when there is a minimum wage, they do not explain the resulting ``spike" in the wage distribution. Our model's predictions are consistent with this evidence. We assume that workers are equally able but have heterogeneous preferences for non-wage characteristics, while employers have heterogeneous productivity characteristics. This results in a model of labor market oligopsony where ``inside'' and ``outside'' forces interact, producing wage dispersion as well as a spike at the minimum wage.

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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 9903003.

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Date of creation: 18 Mar 1999
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Handle: RePEc:wpa:wuwpla:9903003

Note: Type of Document - LaTex; prepared on IBM PC; to print on any;
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Web page: http://128.118.178.162

Related research

Keywords: wage differentials; wage dispersion; monopsony; oligopsony; labor theory; minimum wage;

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References

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  23. V. Bhaskar & Ted To, 1996. "Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition," Labor and Demography 9603001, EconWPA, revised 21 May 1996.
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