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Monopsony Power in Higher Education: A Tale of Two Tracks

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  • Austan Goolsbee
  • Chad Syverson

Abstract

This paper measures the degree of monopsony power in the US higher-education labor market by using school-specific labor demand instruments to directly estimate the residual labor supply curves facing individual universities. The results indicate that schools have significant monopsony power over tenure-track faculty but face perfectly elastic residual labor supply curves for non-tenure-track faculty. There is some evidence for three sources of monopsony power often discussed in the literature—employer concentration, search frictions/job-switching costs, and differentiated jobs. The results also suggest that monopsony over tenure-track faculty may have contributed to the trend toward hiring more non-tenure-track faculty.

Suggested Citation

  • Austan Goolsbee & Chad Syverson, 2023. "Monopsony Power in Higher Education: A Tale of Two Tracks," Journal of Labor Economics, University of Chicago Press, vol. 41(S1), pages 257-290.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/726720
    DOI: 10.1086/726720
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    3. Francesco Amodio & Nicolás de Roux, 2021. "Labor Market Power in Developing Countries: Evidence from Colombian Plants," Documentos CEDE 19267, Universidad de los Andes, Facultad de Economía, CEDE.
    4. Barbara Biasi & Song Ma, 2022. "The Education-Innovation Gap," CESifo Working Paper Series 9653, CESifo.
    5. Amodio, Francesco & Medina, Pamela & Morlacco, Monica, 2022. "Labor Market Power, Self-Employment, and Development," IZA Discussion Papers 15477, Institute of Labor Economics (IZA).
    6. Hashmat Khan & Konstantinos Metaxoglou, 2021. "The Behavior of the Aggregate U.S. Wage Markdown," Carleton Economic Papers 21-06, Carleton University, Department of Economics.
    7. Baker, Michael & Halberstam, Yosh & Kroft, Kory & Mas, Alexandre & Messacar, Derek, 2024. "The impact of unions on wages in the public sector: Evidence from higher education," CLEF Working Paper Series 67, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    8. Steven C. Salop & Fiona Scott Morton, 2021. "The 2010 HMGs Ten Years Later: Where Do We Go From Here?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 81-101, February.
    9. Lisa M. Lynch, 2024. "Panel Discussion: Financial Management Challenges in Higher Education," NBER Chapters, in: Financing Institutions of Higher Education, National Bureau of Economic Research, Inc.
    10. Shubhdeep Deb & Jan Eeckhout & Aseem Patel & Lawrence Warren, 2022. "What Drives Wage Stagnation: Monopsony or Monopoly?," Journal of the European Economic Association, European Economic Association, vol. 20(6), pages 2181-2225.
    11. Elizabeth Lyons & Laurina Zhang, 2023. "Salary transparency and gender pay inequality: Evidence from Canadian universities," Strategic Management Journal, Wiley Blackwell, vol. 44(8), pages 2005-2034, August.
    12. Chau, Nancy H. & Kanbur, Ravi & Soundararajan, Vidhya, 2022. "Employer Power and Employment in Developing Countries," Applied Economics and Policy Working Paper Series 324053, Cornell University, Department of Applied Economics and Management.
    13. Dearing, Adam, 2022. "Estimating structural demand and supply models using tax rates as instruments," Journal of Public Economics, Elsevier, vol. 205(C).
    14. Lagos, Lorenzo, 2024. "Union Bargaining Power and the Amenity-Wage Tradeoff," IZA Discussion Papers 17034, Institute of Labor Economics (IZA).
    15. Shubhdeep Deb & Jan Eeckhout & Aseem Patel & Lawrence Warren, 2022. "What Drives Stagnation: Monopsony or Monopoly?," Working Papers 22-45, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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