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Firm-Level Monopsony and the Gender Pay Gap

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  • Webber, Douglas A.

    () (Temple University)

Abstract

Using a dynamic labor supply model and linked employer-employee data, I find evidence of substantial search frictions, with females facing a higher level of frictions than males. However, the majority of the gender gap in labor supply elasticities is driven by across firm sorting rather than within firm differences, a feature predicted in the search theory literature, but which has not been previously documented. The gender differential in supply elasticities leads to 3.3% lower earnings for women. Roughly 60% of the elasticity differential can be explained by marriage and children penalties faced by women but not men.

Suggested Citation

  • Webber, Douglas A., 2013. "Firm-Level Monopsony and the Gender Pay Gap," IZA Discussion Papers 7343, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7343
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    1. repec:nbp:nbpbik:v:48:y:2017:i:3:p:327-342 is not listed on IDEAS
    2. Jahn, Elke & Hirsch, Boris, 2012. "Is there monopsonistic discrimination against immigrants? First evidence from linked employer employee data," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65417, Verein für Socialpolitik / German Economic Association.
    3. Neumeier, Christian & Sorensen, Todd A. & Webber, Douglas A., 2017. "The Implicit Costs of Motherhood over the Lifecycle: Cross-Cohort Evidence from Administrative Longitudinal Data," IZA Discussion Papers 10558, Institute for the Study of Labor (IZA).
    4. Merlino L.P. & Parrotta P. & Pozzoli D., 2014. "Gender differences in sorting," Research Memorandum 022, Maastricht University, Graduate School of Business and Economics (GSBE).
    5. Hirsch, Boris & Jahn, Elke J. & Schnabel, Claus, 2013. "The Cyclical Behaviour of Employers' Monopsony Power and Workers' Wages," IZA Discussion Papers 7776, Institute for the Study of Labor (IZA).
    6. Hirsch, Barry & Manzella, Julia, 2014. "Who Cares – and Does It Matter? Measuring Wage Penalties for Caring Work," IZA Discussion Papers 8388, Institute for the Study of Labor (IZA).
    7. Boris Hirsch, 2016. "Gender wage discrimination," IZA World of Labor, Institute for the Study of Labor (IZA), pages 310-310, November.

    More about this item

    Keywords

    discrimination; monopsony;

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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