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Monopsony Power, Pay Structure, and Training

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  • Samuel Muehlemann
  • Paul Ryan
  • Stefan C. Wolter

Abstract

Although interest in monopsonistic influences on labor market outcomes has revived in recent years, only a few empirical studies provide direct evidence on this topic. In this article, the authors analyze the effect of monopsony power on pay structure, using a direct measure of labor market thinness. The authors find evidence of monopsony power, as firms facing fewer local competitors offer lower wages to skilled labor and trainees, but not to unskilled labor. The findings have important implications for the economic theory of training, as most recent models assume monopsonistic pay-setting for skilled labor, but not for trainees.

Suggested Citation

  • Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2013. "Monopsony Power, Pay Structure, and Training," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1097-1114, October.
  • Handle: RePEc:sae:ilrrev:v:66:y:2013:i:5:p:1097-1114
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Luca Moretti & Martin Mayerl & Samuel Muehlemann & Peter Schloegl & Stefan C. Wolter, 2017. "So similar and yet so different: A comparative analysis of a firm's net costs and post-apprenticeship training benefits in Austria and Switzerland," Economics of Education Working Paper Series 0137, University of Zurich, Department of Business Administration (IBW), revised Apr 2018.
    2. Moretti, Luca & Mayerl, Martin & Mühlemann, Samuel & Schlögl, Peter & Wolter, Stefan C., 2017. "So Similar and Yet So Different: A Comparative Analysis of a Firm's Cost and Benefits of Apprenticeship Training in Austria and Switzerland," IZA Discussion Papers 11081, Institute for the Study of Labor (IZA).
    3. Stockinger, Bastian & Zwick, Thomas, 2016. "Apprentice Poaching in Regional Labor Markets," Annual Conference 2016 (Augsburg): Demographic Change 145565, Verein für Socialpolitik / German Economic Association.
    4. Paul Ryan & Uschi Backes-Gellner & Silvia Teuber & Karin Wagner, 2012. "Apprentice pay in Britain, Germany and Switzerland: institutions, market forces, market power," Economics of Education Working Paper Series 0075, University of Zurich, Department of Business Administration (IBW).
    5. Anika Jansen & Mirjam Strupler Leiser & Felix Wenzelmann & Stefan C. Wolter, 2012. "The effect of labor market regulations on training behavior and quality: the German labor market reform as a natural experiment," Economics of Education Working Paper Series 0083, University of Zurich, Department of Business Administration (IBW).
    6. Hinz, Tina & Mohrenweiser, Jens, 2017. "The Effect of Regional Competition and Company-sponsored Training on the Productivity-Wage Wedge," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168292, Verein für Socialpolitik / German Economic Association.
    7. Fries, Jan & Göbel, Christian & Maier, Michael F., 2013. "Do employment subsidies reduce early apprenticeship dropout?," ZEW Discussion Papers 13-053, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Paul Ryan, 2011. "Apprenticeship: between theory and practice, school and workplace," Economics of Education Working Paper Series 0064, University of Zurich, Department of Business Administration (IBW), revised Oct 2011.
    9. By Barbara Mueller & Jürg Schweri, 2015. "How specific is apprenticeship training? Evidence from inter-firm and occupational mobility after graduation," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 1057-1077.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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