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Testing for Employer Monopsony in Turn-of-the-Century Coal Mining

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  • William M. Boal

Abstract

Isolated company towns are often cited as likely examples of labor monopsony. This article tests for monopsony power by estimating inverse labor supply elasticities using a county-level panel dataset on nonunion West Virginia coal mining from 1897 to 1932. The model specification incorporates dynamics in such a way that an estimate of the gap between marginal revenue product and the wage can easily be computed as a weighted average of short- and long-run inverse elasticities. Modest estimated short-run inverse elasticities and very small long-run inverse elasticities imply that coal operators enjoyed little, if any, monopsony power over their workers.

Suggested Citation

  • William M. Boal, 1995. "Testing for Employer Monopsony in Turn-of-the-Century Coal Mining," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 519-536, Autumn.
    • Handle: RePEc:rje:randje:v:26:y:1995:i:autumn:p:519-536
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    Cited by:

    1. Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, January.
    2. Austan Goolsbee & Chad Syverson, 2023. "Monopsony Power in Higher Education: A Tale of Two Tracks," Journal of Labor Economics, University of Chicago Press, vol. 41(S1), pages 257-290.
    3. Dobbelaere, Sabien & Kiyota, Kozo & Mairesse, Jacques, 2015. "Product and labor market imperfections and scale economies: Micro-evidence on France, Japan and the Netherlands," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 290-322.
    4. Beth Asch & Paul Heaton, 2008. "Monopsony and Labor Supply in the Army and Navy," Working Papers 1107, Princeton University, Department of Economics, Industrial Relations Section..
    5. Tabasso, D, 2009. "Temporary Contracts and Monopsony Power in the UK Labour Market," Economics Discussion Papers 8938, University of Essex, Department of Economics.
    6. Hernán Vallejo, 2007. "A generalized index of market power," Revista de Economía del Rosario, Universidad del Rosario, December.
    7. Kevin Rinz, 2018. "Labor Market Concentration, Earnings Inequality, and Earnings Mobility," CARRA Working Papers 2018-10, Center for Economic Studies, U.S. Census Bureau.
    8. Beth Asch & Paul Heaton, 2008. "Monopsony and Labor Supply in the Army and Navy," Working Papers 1107, Princeton University, Department of Economics, Industrial Relations Section..
    9. Torberg Falch, 2010. "The Elasticity of Labor Supply at the Establishment Level," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 237-266, April.
    10. Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring.
    11. Douglas O. Staiger & Joanne Spetz & Ciaran S. Phibbs, 2010. "Is There Monopsony in the Labor Market? Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 211-236, April.
    12. Timothy Perri Perri, 2023. "The Death of Labor Market Competition Has Been Greatly Exaggerated," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 38(Summer 20), pages 39-54.
    13. Isayenko Oleksiy & Maryanchyk Ivan, 2006. "Market power in oligopoly: The case of the Ukrainian cement industry," EERC Working Paper Series 06-06e, EERC Research Network, Russia and CIS.
    14. Javier Silvestre & John E. Murray, 2023. "Determinants in the adoption of a non-labor-substitution technology: mechanical ventilation in West Virginia coal mines, 1898–1907," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 17(3), pages 467-500, September.
    15. Wojan, Timothy R. & Lackey, Steven Brent, 2000. "Manufacturing Specialization in the Southeast: Rural Necessity, Rural Possibility, or Rural Vestige?," The Review of Regional Studies, Southern Regional Science Association, vol. 30(2), pages 167-187, Fall.
    16. Naoto Jinji, 2012. "Factor market monopsony and international duopoly," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(2), pages 271-286, February.
    17. Depew, Briggs & Sørensen, Todd A., 2013. "The elasticity of labor supply to the firm over the business cycle," Labour Economics, Elsevier, vol. 24(C), pages 196-204.
    18. Giovanni Sulis, 2011. "What can monopsony explain of the gender wage differential in Italy?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(4), pages 446-470, July.
    19. Torberg Falch, 2008. "The elasticity of labor supply at the establishment level," Working Papers 1106, Princeton University, Department of Economics, Industrial Relations Section..
    20. Boudreaux, Don & Palagashvili, Liya, 2016. "An Economic Analysis of Overtime Pay Regulations," Working Papers 06869, George Mason University, Mercatus Center.
    21. Bonanno, Alessandro & Lopez, Rigoberto A., 2012. "Wal-Mart's monopsony power in metro and non-metro labor markets," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 569-579.

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