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Dynamic Monopsony: Evidence from a French Establishment Panel

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  • Fakhfakh, Fathi

    (University of Paris 2 - ERMES)

  • FitzRoy, Felix

    (University of St. Andrews)

Abstract

This paper uses a panel of about 6000 French establishments to test some implications of the modern theory of dynamic monopsony or upward sloping labour supply curves for average firm wages. Panel estimates provide strong evidence of a much larger long run employer size - wage effect (ESWE) than found previously, while controlling for worker quality and compensating differentials with lagged wages, and for profitability (rent sharing). Employment expansion also has a positive effect on wages, providing further evidence for upward sloping labour supply (as distinct from the effect of shocks in a perfectly competitive labour market).

Suggested Citation

  • Fakhfakh, Fathi & FitzRoy, Felix, 2005. "Dynamic Monopsony: Evidence from a French Establishment Panel," IZA Discussion Papers 1622, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1622
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    16. repec:crs:wpaper:9730 is not listed on IDEAS
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    Cited by:

    1. Maritza López Novella & Salimata Sissoko, 2013. "Understanding wage determination in a multi-level bargaining system: a panel data analysis," Empirical Economics, Springer, vol. 44(2), pages 879-897, April.
    2. Thierry Lallemand & Robert Plasman & François Rycx, 2007. "The establishment-size wage premium: evidence from European countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(5), pages 427-451, December.
    3. Kovalenko, Tim & Sauerbier, Timo & Schröpf, Benedikt, 2024. "The fall and rebound of average establishment size in West Germany," Discussion Papers 11/2024, Deutsche Bundesbank.
    4. Anna Sokolova & Todd Sorensen, 2021. "Monopsony in Labor Markets: A Meta-Analysis," ILR Review, Cornell University, ILR School, vol. 74(1), pages 27-55, January.
    5. Binnur Balkan & Semih Tumen, 2016. "Firm-Size Wage Gaps along the Formal-Informal Divide: Theory and Evidence," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 235-266, April.
    6. Colin Green & John S. Heywood & Nikolaos Theodoropoulos, 2017. "Employer size and supervisor earnings: Evidence from Britain," University of Cyprus Working Papers in Economics 04-2017, University of Cyprus Department of Economics.
    7. Giovanni Sulis, 2011. "What can monopsony explain of the gender wage differential in Italy?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(4), pages 446-470, July.
    8. Colin P. Green & John S. Heywood & Nikolaos Theodoropoulos, 2021. "Hierarchy and the Employer Size Effect on Wages: Evidence from Britain," Economica, London School of Economics and Political Science, vol. 88(351), pages 671-696, July.
    9. Kovalenko, Tim & Sauerbier, Timo & Schröpf, Benedikt, 2023. "The fall and rebound of average establishment size in West Germany," Discussion Papers 126, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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    More about this item

    Keywords

    dynamic monopsony; firm-size wage effect; labour supply;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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