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Monopsonistic Behavior in Chilean Manufacturing

Author

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  • David Mackinson

    () (Universidad Alberto Hurtado)

  • Lucas Navarro

    () (Universidad Alberto Hurtado)

Abstract

This paper uses a firm-specific method for measuring monopsonistic behavior developed by Brummund (2012) using data for Chilean manufacturing plants for the period 2001-2006. We find that there is significant heterogeneity in labor market power across plants and that nearly a quarter of the plants have a significant level of labor market power. It is also shown that individual plant characteristics explain more of the variation in monopsonistic behavior than do the characteristics of the accompanying labor market. These results are relevant for labor market policy since and suggest that a binding minimum wage could have ambiguous effects on welfare.

Suggested Citation

  • David Mackinson & Lucas Navarro, 2013. "Monopsonistic Behavior in Chilean Manufacturing," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 28(2), pages 91-108, October.
  • Handle: RePEc:ila:anaeco:v:28:y:2013:i:2:p:91-108
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    Keywords

    Monopsony; labor markets; Chile;

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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