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Modelling Monospony on the Labor Market with Separable Matching Models

Author

Listed:
  • Corblet, Pauline

    (NYU Abu Dhabi)

  • Dupuy, Arnaud

    (University of Luxembourg)

Abstract

We model monopsony on the labor market using a separable matching model a la Choo and Siow (2006). We propose a simple method that estimates 1) the multidimensional determinants of productivity and non-wage preferences separately and 2) the variance of unobserved heterogeneity on both sides of the market. Simulations show the effectiveness of the method. An application to Portuguese data reveals that the variance of unobserved heterogeneity is one order of magnitude larger for workers than for firms and represents about 29% of the variance in nonwage preferences of workers, while observed characteristics of workers and firms explain 71%.

Suggested Citation

  • Corblet, Pauline & Dupuy, Arnaud, 2024. "Modelling Monospony on the Labor Market with Separable Matching Models," IZA Discussion Papers 17563, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17563
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    References listed on IDEAS

    as
    1. Jeremy Lise & Fabien Postel-Vinay, 2020. "Multidimensional Skills, Sorting, and Human Capital Accumulation," American Economic Review, American Economic Association, vol. 110(8), pages 2328-2376, August.
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    3. Francine D. Blau & Lawrence M. Kahn, 2017. "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 789-865, September.
    4. Pierre-André Chiappori & Bernard Salanié & Yoram Weiss, 2017. "Partner Choice, Investment in Children, and the Marital College Premium," American Economic Review, American Economic Association, vol. 107(8), pages 2109-2167, August.
    5. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    6. David Card, 2022. "Who Set Your Wage?," American Economic Review, American Economic Association, vol. 112(4), pages 1075-1090, April.
    7. 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.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    monopsony; amenities; matching models; unobserved heterogeneity; Pseudo-Poisson Maximum Likelihood;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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