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


  • William M. Boal

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


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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    References listed on IDEAS

    1. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
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    4. Mark C. Berger & Dan A. Black, 1998. "The Duration Of Medicaid Spells: An Analysis Using Flow And Stock Samples," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 667-675, November.
    5. Hoang, Ha & Rascher, Dan, 1999. "The NBA, Exit Discrimination, and Career Earnings," MPRA Paper 3542, University Library of Munich, Germany.
    6. Bernt Bratsberg & Dek Terrell, 1998. "Experience, Tenure, and Wage Growth of Young Black and White Men," Journal of Human Resources, University of Wisconsin Press, vol. 33(3), pages 658-682.
    7. Peter A. Groothuis & J. Richard Hill, 2002. "Exit Discrimination in the NBA: A Duration Analysis of Career Length Using Flow and Stock Samples," Working Papers 02-11, Department of Economics, Appalachian State University.
    8. Kanazawa, Mark T & Funk, Jonas P, 2001. "Racial Discrimination in Professional Basketball: Evidence from Nielsen Ratings," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 599-608, October.
    9. Donald J. Cymrot, 1985. "Does Competition Lessen Discrimination? Some Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 605-612.
    10. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
    11. Lawrence M. Kahn, 1991. "Discrimination in Professional Sports: A Survey of the Literature," ILR Review, Cornell University, ILR School, vol. 44(3), pages 395-418, April.
    12. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, vol. 27(2), pages 519-564, June.
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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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