Monopsony Power in Occupational Labor Markets

  • Fabio MéndezEmail author
  • Facundo Sepúlveda


We collect data from the 1979 National Longitudinal Survey of Youth and create comparable measures of monopsonistic power for up to 46 occupational labor markets in the USA, starting in 1979 and ending in 2000. Our results suggest most occupational labor markets during that period were characterized by substantial amounts of monopsonistic, wage-setting power. Furthermore, after controlling for individual, time, and industry fixed effects, our results show a negative and significant correlation between the extent of monopsony power that characterizes a market and both, the wages and fringe benefits received by workers.


Monopsony Wages Fringe benefits 

JEL Classification

J42 J31 J51 


Compliance with Ethical Standards

Conflict of interests

The authors declare that they have no conflict of interest.


  1. Acemoglu D, Pischke J-S (1999) Training in imperfect labor markets. Econ J 109(453):112–42CrossRefGoogle Scholar
  2. Abrams R (2017) Why aren’t paychecks growing? A burger-joint clause offers a clue. The New York times, September 27Google Scholar
  3. Ashenfelter OC, Farber H, Ransom MR (2010) Labor market monopsony. J Labor Econ 28(2):203–10CrossRefGoogle Scholar
  4. Barth E, Dale-Olsen H (2009) Monopsonistic discrimination, worker turnover, and the gender wage gap. Labour Econ 16(5):589–597CrossRefGoogle Scholar
  5. Burdett K, Mortensen DT (1998) Wage differentials, employer size, and unemployment. Int Econ Rev 39(2):257–273CrossRefGoogle Scholar
  6. Council of Economic Advisers Issue Brief (2016) October 2016Google Scholar
  7. Falch T (2010) The elasticity of labor supply at the establishment level. J Labor Econ 28(2):237–66CrossRefGoogle Scholar
  8. Falch T (2011) Teacher mobility responses to wage changes: Evidence from a quasi-natural experiment. Am Econ Rev 101(3):460–65CrossRefGoogle Scholar
  9. Hirsch TB, Schumacher J (2005) Classic or new monopsony? Searching for evidence in nursing labor markets Journal of Health Economics 24(5):969–989Google Scholar
  10. Hirsch B, Schank T, Schnabel C (2010) Differences in labor supply to monopsonistic firms and the gender pay gap: An empirical analysis using linked employer-employee data from germany. J Labor Econ 28(2):291–330CrossRefGoogle Scholar
  11. Kambourov G, Manovskii I (2009) Occupational specificity of human capital. Int Econ Rev 50(1):63–115CrossRefGoogle Scholar
  12. Lewbel A (1997) Constructing instruments for regressions with measurement error when no additional data are available, with an application to patents and R&D. Econometrica 65(5):1201–1213CrossRefGoogle Scholar
  13. Manning A (2003) Monopsony in motion. Princeton University Press, PrincetonGoogle Scholar
  14. Manning A (2011) Imperfect competition in the labour market. Handbook of labor economics 4(part B):973–1041Google Scholar
  15. Mendez F (2019) Training opportunities in monopsonistic labor markets. Applied Economics, forthcomingGoogle Scholar
  16. Muehlemann S, Ryan P, Wolter SC (2013) Monopsony power, pay structure and training. ILR Rev 66(5):1097–1114CrossRefGoogle Scholar
  17. Ransom MR, Sims DP (2010) Estimating the firm’s labor supply curve in a new monopsony framework: Schoolteachers in missouri. J Labor Econ 28(2):331–355CrossRefGoogle Scholar
  18. Sullivan D (1989) Monopsony power in market for nurses. J Law Econ 32 (2):135–178CrossRefGoogle Scholar
  19. Staiger DO, Spetz J, Phibbs CS (2010) Is there monopsony in the labor market? Evidence from a natural experiment. J Labor Econ 28(2):211–236CrossRefGoogle Scholar
  20. Webber DA (2015) Firm market power and the earnings distribution. Labour Econ 35:123–34CrossRefGoogle Scholar
  21. Webber DA (2016) Firm-level monopsony and the gender pay gap. Industrial Relations a Journal of Economy and Society 55(2):323–45CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Loyola University MarylandBaltimoreUSA
  2. 2.Universidad de Santiago de ChileSantiagoChile

Personalised recommendations