Monopsony in Motion: Imperfect Competition in Labor Markets

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Princeton University Press, 2003 - Business & Economics - 401 pages
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What happens if an employer cuts wages by one cent? Much of labor economics is built on the assumption that all the workers will quit immediately. Here, Alan Manning mounts a systematic challenge to the standard model of perfect competition. Monopsony in Motion stands apart by analyzing labor markets from the real-world perspective that employers have significant market (or monopsony) power over their workers. Arguing that this power derives from frictions in the labor market that make it time-consuming and costly for workers to change jobs, Manning re-examines much of labor economics based on this alternative and equally plausible assumption.


The book addresses the theoretical implications of monopsony and presents a wealth of empirical evidence. Our understanding of the distribution of wages, unemployment, and human capital can all be improved by recognizing that employers have some monopsony power over their workers. Also considered are policy issues including the minimum wage, equal pay legislation, and caps on working hours. In a monopsonistic labor market, concludes Manning, the "free" market can no longer be sustained as an ideal and labor economists need to be more open-minded in their evaluation of labor market policies. Monopsony in Motion will represent for some a new fundamental text in the advanced study of labor economics, and for others, an invaluable alternative perspective that henceforth must be taken into account in any serious consideration of the subject.


 

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Contents

Introduction
3
Simple Models of Monopsony and Oligopsony
29
Efficiency in Oligopsonistic Labor Markets
56
The Elasticity of the Labor Supply Curve to an Individual Firm
80
The Wage Policies of Employers
117
Earnings and the Life Cycle
141
Gender Discrimination in Labor Markets
193
Employers and Wages
217
Unemployment Inactivity and Labor Supply
239
Vacancies and the Demand for Labor
269
Human Capital and Training
301
The Minimum Wage and Trade Unions
325
Data Sets Appendix
369
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Page 5 - In the long run the workman may be as necessary to his master as his master is to him ; but the necessity is not so immediate.
Page 5 - ... that the sellers of it are commonly poor and have no reserve fund, and that they cannot easily withhold it from the market.
Page 4 - The supply of labor to an individual firm might be limited for the same sort of reasons. For instance, there may be a certain number of workers in the immediate neighborhood and to attract those from further afield it may be necessary to pay a wage equal to what they can earn at home plus their fares to and fro; or there may be workers attached to the firm by preference or custom and to attract others it may be necessary to pay a higher wage. Or ignorance may prevent workers from moving from one...
Page 6 - This art forms a large part of the daily life of the entrepreneur, whilst the foreman is specially selected for his skill in engaging and superintending workmen. The manual worker, on the contrary, has the very smallest experience of, and practically no training in, what is essentially one of the arts of the capitalist employer. He never engages in any but one sort of bargaining, and that only on occasions which may be infrequent, and which in any case make up only a tiny fraction of his life.
Page 5 - Meanwhile the isolated workman is wholly in the dark as to how much he may stand out for. At such disadvantages it is comparatively a minor matter that the manual worker is, from his position and training, far less skilled than the employer or his foreman, in the art of bargaining itself. This art forms a large part of the daily life of the employer, whilst the foreman is specially selected for his skill in engaging and superintending workmen. The manual worker, on the contrary, has the very smallest...

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About the author (2003)

Alan Manning is Professor of Economics and Director of the Labour Markets Programme in the Centre for Economic Performance at the London School of Economics. He has published numerous papers on labor economics.

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