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Oligopsony and the Distribution of Wages

Author

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  • V. Bhaskar

    (University of Essex)

  • Ted To

    (University of Warwick)

Abstract

A number of theories (search and efficiency wages) have been developed, in part, to explain why identically able workers are often paid different wages. However, when there is a minimum wage, they do not explain the resulting ``spike" in the wage distribution. Our model's predictions are consistent with this evidence. We assume that workers are equally able but have heterogeneous preferences for non-wage characteristics, while employers have heterogeneous productivity characteristics. This results in a model of labor market oligopsony where ``inside'' and ``outside'' forces interact, producing wage dispersion as well as a spike at the minimum wage.

Suggested Citation

  • V. Bhaskar & Ted To, 1999. "Oligopsony and the Distribution of Wages," Labor and Demography 9903003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpla:9903003
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    References listed on IDEAS

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    More about this item

    Keywords

    wage differentials; wage dispersion; monopsony; oligopsony; labor theory; minimum wage;
    All these keywords.

    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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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