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Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany

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  • Boris Hirsch
  • Thorsten Schank
  • Claus Schnabel

Abstract

This article investigates women's and men's labor supply to the firm within a semistructural approach based on a dynamic model of new monopsony. Using methods of survival analysis and a large linked employer-employee data set for Germany, we find that labor supply elasticities are small (1.9-3.7) and that women's labor supply to the firm is less elastic than men's (which is the reverse of gender differences in labor supply usually found at the level of the market). Our results imply that at least one-third of the gender pay gap might be wage discrimination by profit-maximizing monopsonistic employers. (c) 2010 by The University of Chicago.

Suggested Citation

  • Boris Hirsch & Thorsten Schank & Claus Schnabel, 2010. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 291-330, April.
    • Handle: RePEc:ucp:jlabec:v:28:y:2010:i:2:p:291-330
    DOI: 10.1086/651208
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    More about this item

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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