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Monopsony Power in Higher Education: A Tale of Two Tracks

Author

Listed:
  • Austan Goolsbee
  • Chad Syverson

Abstract

This paper measures the degree of monopsony power in the US higher-education labor market by using school-specific labor demand instruments to directly estimate the residual labor supply curves facing individual universities. The results indicate that schools have significant monopsony power over tenure-track faculty but face perfectly elastic residual labor supply curves for non-tenure-track faculty. There is some evidence for three sources of monopsony power often discussed in the literature—employer concentration, search frictions/job-switching costs, and differentiated jobs. The results also suggest that monopsony over tenure-track faculty may have contributed to the trend toward hiring more non-tenure-track faculty.

Suggested Citation

  • 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.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/726720
    DOI: 10.1086/726720
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    Cited by:

    1. Mertens, Matthias, 2023. "Labor Market Power and Between-Firm Wage (In)Equality," International Journal of Industrial Organization, Elsevier, vol. 91(C).
    2. Amodio, Francesco & de Roux, Nicolás, 2021. "Labor Market Power in Developing Countries: Evidence from Colombian Plants," CEPR Discussion Papers 16180, C.E.P.R. Discussion Papers.
    3. Steven C. Salop & Fiona Scott Morton, 2021. "The 2010 HMGs Ten Years Later: Where Do We Go From Here?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 81-101, February.
    4. Michael Baker & Yosh Halberstam & Kory Kroft & Alexandre Mas & Derek Messacar, 2024. "The Impact of Unions on Wages in the Public Sector: Evidence from Higher Education," NBER Working Papers 32277, National Bureau of Economic Research, Inc.
    5. Lisa M. Lynch, 2024. "Panel Discussion: Financial Management Challenges in Higher Education," NBER Chapters, in: Financing Institutions of Higher Education, pages 417-426, National Bureau of Economic Research, Inc.
    6. Shubhdeep Deb & Jan Eeckhout & Aseem Patel & Lawrence Warren, 2022. "What Drives Wage Stagnation: Monopsony or Monopoly?," Journal of the European Economic Association, European Economic Association, vol. 20(6), pages 2181-2225.
    7. Dearing, Adam, 2022. "Estimating structural demand and supply models using tax rates as instruments," Journal of Public Economics, Elsevier, vol. 205(C).
    8. Francesco Amodio & Pamela Medina & Monica Morlacco, 2025. "Labor Market Power, Self-Employment, and Development," American Economic Review, American Economic Association, vol. 115(9), pages 3014-3057, September.
    9. Mauro Caselli & Andrea Locatelli & Stefano Schiavo, 2025. "Labour market frictions across worker types," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 42(3), pages 799-827, October.
    10. Shubhdeep Deb & Jan Eeckhout & Aseem Patel & Lawrence Warren, 2022. "What Drives Stagnation: Monopsony or Monopoly?," Working Papers 22-45, Center for Economic Studies, U.S. Census Bureau.
    11. Ihsaan Bassier & Alan Manning, 2025. "Estimating labour market power: the long and short of it," CEP Discussion Papers dp2108, Centre for Economic Performance, LSE.
    12. repec:bge:wpaper:1361 is not listed on IDEAS
    13. Luan, Mengna & Tao, Zhigang & Yuan, Hongjie, 2023. "Monopsony power and workers’ switching costs: Evidence from hospitals in China," Economics Letters, Elsevier, vol. 233(C).
    14. Barbara Biasi & Song Ma, 2022. "The Education-Innovation Gap," CESifo Working Paper Series 9653, CESifo.
    15. Hashmat Khan & Konstantinos Metaxoglou, 2021. "The Behavior of the Aggregate U.S. Wage Markdown," Carleton Economic Papers 21-06, Carleton University, Department of Economics.
    16. Elizabeth Lyons & Laurina Zhang, 2023. "Salary transparency and gender pay inequality: Evidence from Canadian universities," Strategic Management Journal, Wiley Blackwell, vol. 44(8), pages 2005-2034, August.
    17. Chau, Nancy H. & Kanbur, Ravi & Soundararajan, Vidhya, "undated". "Employer Power and Employment in Developing Countries," Applied Economics and Policy Working Paper Series 324053, Cornell University, Department of Applied Economics and Management.
    18. Lagos, Lorenzo, 2024. "Union Bargaining Power and the Amenity-Wage Tradeoff," IZA Discussion Papers 17034, IZA Network @ LISER.

    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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