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The Effect of Minimum Salaries on Employment of Teachers: A Test of the Monopsony Model

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  • William M. Boal

    () (College of Business and Public Administration, Drake University, Des Moines, Iowa 50311, USA)

Abstract

The market for schoolteachers, at least outside metropolitan areas, has frequently been cited as an example of labor monopsony. To test for monopsony, this study measures the employment effects of increases in state-mandated minimum salaries in two nonunion states: South Carolina and Texas. In South Carolina, there is weak evidence of a negative effect in rural school districts, with an estimated short-run demand elasticity of about 20.2. In Texas, there is strong evidence of a negative effect in both urban and rural school districts, with an estimated short-run demand elasticity of about 20.4. These results apparently reject the monopsony model of the market for schoolteachers.

Suggested Citation

  • William M. Boal, 2009. "The Effect of Minimum Salaries on Employment of Teachers: A Test of the Monopsony Model," Southern Economic Journal, Southern Economic Association, vol. 75(3), pages 611-638, January.
  • Handle: RePEc:sej:ancoec:v:75:3:y:2009:p:611-638
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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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