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Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany

Author

Listed:
  • Boris Hirsch

    (University of Erlangen-Nurnberg)

  • Thorsten Schank

    (University of Erlangen-Nurnberg)

  • Claus Schnabel

    (University of Erlangen-Nurnberg and IZA)

Abstract

This paper investigates women's and men's labor supply to the firm within a structural approach based on a dynamic model of new monopsony. Using methods of survival analysis and a large linked employer-employee dataset for Germany, we find that labor supply elasticites are small (1.9-3.7) and the women's labor supply to the firm is less elastic than men's (which is the reverse of gender differences in labor supply usually found at the level of the market). Our results imply that about one third of the gender pay gap might be wage discrimination by profit-maximizing monopsonistic employers.

Suggested Citation

  • Boris Hirsch & Thorsten Schank & Claus Schnabel, 2008. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Working Papers 1111, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:541
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    More about this item

    Keywords

    labor supply; monopsony; gender; gender pay gap; discrimination; monopsony papers; Germany;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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