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Dynamic Monopsony: Evidence from a French Establishment Panel

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  • FATHI FAKHFAKH
  • FELIX FITZROY

Abstract

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.

Suggested Citation

  • Fathi Fakhfakh & Felix Fitzroy, 2006. "Dynamic Monopsony: Evidence from a French Establishment Panel," Economica, London School of Economics and Political Science, vol. 73(291), pages 533-545, August.
  • Handle: RePEc:bla:econom:v:73:y:2006:i:291:p:533-545
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    References listed on IDEAS

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    Cited by:

    1. Giovanni Sulis, 2011. "What can monopsony explain of the gender wage differential in Italy?," International Journal of Manpower, Emerald Group Publishing, vol. 32(4), pages 446-470, July.
    2. Maritza López Novella & Salimata Sissoko, 2013. "Understanding wage determination in a multi-level bargaining system: a panel data analysis," Empirical Economics, Springer, vol. 44(2), pages 879-897, April.
    3. Thierry Lallemand & Robert Plasman & François Rycx, 2007. "The establishment-size wage premium: evidence from European countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(5), pages 427-451, December.
    4. Binnur Balkan & Semih Tumen, 2016. "Firm-Size Wage Gaps along the Formal-Informal Divide: Theory and Evidence," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 235-266, April.
    5. Colin Green & John S. Heywood & Nikolaos Theodoropoulos, 2017. "Employer size and supervisor earnings: Evidence from Britain," University of Cyprus Working Papers in Economics 04-2017, University of Cyprus Department of Economics.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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