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Oligopsony and the distribution of wages

  • Bhaskar, V.
  • To, Ted

We present a simple model which is consistent with the evidence on wage dispersion, including persistent inter- and intra-industry wage differentials, and the effects of minimum wages on this distribution. Our model assumes 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 in wage determination, with results which are consistent with the empirical evidence.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 47 (2003)
Issue (Month): 2 (April)
Pages: 371-399

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Handle: RePEc:eee:eecrev:v:47:y:2003:i:2:p:371-399
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  19. Sullivan, Daniel, 1989. "Monopsony Power in the Market for Nurses," Journal of Law and Economics, University of Chicago Press, vol. 32(2), pages S135-78, October.
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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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