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Dynamic Monopsony: Evidence from a French Establishment Panel

  • FATHI FAKHFAKH
  • FELIX FITZROY

This paper uses a panel of about 6000 French establishments to test some implications of the modern theory of dynamic monopsony or upward-sloping labour supply curves for average firm wages. Panel estimates provide strong evidence of a much larger long-run employer size-wage effect (ESWE) than found previously, while controlling for worker quality and compensating differentials with lagged wages, and for profitability (rent-sharing). Employment expansion also has a positive effect on wages, providing further evidence for upward-sloping labour supply (as distinct from the effect of shocks in a perfectly competitive labour market). Copyright (c) The London School of Economics and Political Science 2006.

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Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 73 (2006)
Issue (Month): 291 (08)
Pages: 533-545

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Handle: RePEc:bla:econom:v:73:y:2006:i:291:p:533-545
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  1. Simon Burgess & Julia Lane & David Stevens, 1996. "Job Flows, Worker Flows and Churning," Labor and Demography 9604004, EconWPA.
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  9. Blanchflower, David G & Oswald, Andrew J & Sanfey, Peter, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 227-51, February.
  10. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
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  13. Kenneth R. Troske & Kimberly Bayard, 1999. "Examining the Employer-Size Wage Premium in the Manufacturing, Retail Trade, and Service Industries Using Employer-Employee Matched Data," American Economic Review, American Economic Association, vol. 89(2), pages 99-103, May.
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  16. 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, vol. 39(2), pages 257-73, May.
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