The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Monopsonistic Discrimination and the Gender Wage Gap

  • Erling Barth
Reference work entry


Monopsonistic discrimination refers to a situation in which employers differentiate pay between groups of workers who exhibit different elasticities of labour supply. The concept of dynamic monopsony has revived the idea of monopsonistic discrimination in the labour market. As there are frictions in the job-to-job mobility of workers, firms may exercise market power even in labour markets with thousands of employers. If there are more frictions in the labour market for women than for men, a gender wage gap may arise as employers exploit this difference and segment their pay policy towards each gender.


Discrimination Gender pay gap Job mobility Labour markets Labour supply Monopsony Wage determination Wage dispersion 

JEL Classifications

D43 J3 J43 J63 J71 
This is a preview of subscription content, log in to check access.


  1. Albanesi, S., and C. Olivetti. 2009. Home production, market production and the gender wage gap: Incentives and expectations. Review of Economic Dynamics 12(1): 80–107.CrossRefGoogle Scholar
  2. Arrow, K.J. 1973. The theory of discrimination. In Discrimination in labour markets, ed. O. Ashenfelter and A. Rees. Princeton: Princeton University Press.Google Scholar
  3. Barth, E., and H. Dale-Olsen. 2009. Monopsonistic discrimination, worker turnover and the gender wage gap. Labour Economics 16: 589–597.CrossRefGoogle Scholar
  4. Barth, E., A. Bryson, J.C. Davis, and R.B. Freeman. 2015. It’s where you work: Increases in earnings dispersion across establishments and individuals in the U.S. Journal of Labor Economics (forthcoming).Google Scholar
  5. Becker, G.S. 1971. The economics of discrimination. 2nd ed. Chicago: Chicago University Press.CrossRefGoogle Scholar
  6. Bergmann, B.R. 1974. Occupational segregation, wages and profits when employers discriminate by race or sex. Eastern Economic Journal 1(2): 103–110.Google Scholar
  7. Blau, F.D., and L.M. Kahn. 2006. The U.S. gender pay gap in the 1990s: Slowing convergence. Industrial and Labour Relations Review 60(1): 45–66.CrossRefGoogle Scholar
  8. Burdett, K., and D. Mortensen. 1998. Equilibrium wage differentials and employer size. International Economic Review 39: 257–273.CrossRefGoogle Scholar
  9. Card, D., A.R. Cardoso, and P. Kline. 2015. Bargaining, sorting, and the gender wage gap: Quantifying the impact of firms on the relative pay of women, NBER Working Papers 21403. Cambridge: National Bureau of Economic Research.CrossRefGoogle Scholar
  10. Falch, T. 2010. Teacher mobility responses to wage changes: Evidence from a quasi-natural experiment. American Economic Review 101(3): 460–465.CrossRefGoogle Scholar
  11. Goldin, C. 2006. The quiet revolution that transformed women’s employment, education, and family. American Economic Review 96(2): 1–21.CrossRefGoogle Scholar
  12. Goldin, C. 2014. A grand gender convergence: Its last chapter. American Economic Review 104(4): 1091–1119.CrossRefGoogle Scholar
  13. Green, F., S. Machin, and A. Manning. 1996. The employer size-wage effect: Can dynamic monopsony provide an explanation? Oxford Economic Papers 48: 433–455.CrossRefGoogle Scholar
  14. Hirsch, B., T. Schank, and C. Schnabel. 2010. Differences in labour supply to monopsonistic firms and the gender pay gap: An empirical analysis using linked employer-employee data from Germany. Journal of Labour Economics 28(2): 291–330.CrossRefGoogle Scholar
  15. Keith, K., and A. McWilliams. 1999. The returns to mobility and job search by gender. Industrial and Labour Relations Review 52: 463–474.CrossRefGoogle Scholar
  16. Loprest, P.J. 1993. Gender differences in wage growth and job mobility. American Economic Review 82: 526–532.Google Scholar
  17. Lucifora, C., and B. Reilly. 1990. Wage discrimination and female occupational intensity. Labour 4: 147–168.CrossRefGoogle Scholar
  18. Manning, A. 1996. The Equal Pay Act as an experiment to test theories of the labour market. Economica 63: 191–212.CrossRefGoogle Scholar
  19. Manning, A. 2003. Monopsony in motion. Imperfect competition in labour markets. Princeton: Princeton University Press.Google Scholar
  20. Nanos, P., and C. Schluter. 2014. The composition of wage differentials between migrants and natives. European Economic Review 65(C): 23–44.CrossRefGoogle Scholar
  21. Ransom, M., and R. Oaxaca. 2010. New market power models and sex differences in pay. Journal of Labour Economics 28(2): 267–290.CrossRefGoogle Scholar
  22. Robinson, J. 1933. The economics of imperfect competition. London: Macmillan.Google Scholar
  23. Sicherman, N. 1996. Gender differences in departures from a large firm. Industrial and Labour Relations Review 49: 484–505.CrossRefGoogle Scholar
  24. Staiger, D.O., J. Spetz, and C.S. Phibbs. 2010. Is there monopsony in the labour market? Evidence from a natural experiment. Journal of Labour Economics 28(2): 211–236.CrossRefGoogle Scholar
  25. Webber, D.A. 2013. Firm market power and the earnings distribution, IZA Discussion Papers 7342. Bonn: Institute for the Study of Labor (IZA).Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Erling Barth
    • 1
  1. 1.