The Plant Size-Place Effect: Agglomeration and Monopsony in Labour Markets

Alan Manning

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper shows, using data from both the US and the UK, that average plant size is larger in denser markets. However, many popular theories of agglomeration - spillovers, cost advantages and improved match quality - predict that establishments should be smaller in cities. The paper proposes a theory based on monopsony in labour markets that can explain the stylized fact - that firms in all labour markets have some market power but that they have less market power in cities. It also presents evidence that the labour supply curve to individual firms is more elastic in larger markets.

Keywords: Agglomeration; Labour Markets; Monopsony (search for similar items in EconPapers)
JEL-codes: J21 J42 R23 (search for similar items in EconPapers)
Date: 2007-01
New Economics Papers: this item is included in nep-bec, nep-geo, nep-ltv and nep-ure
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https://cep.lse.ac.uk/pubs/download/dp0773.pdf (application/pdf)

Related works:
Journal Article: The plant size-place effect: agglomeration and monopsony in labour markets (2010)
Working Paper: The Plant Size-Place Effect: Agglomeration and Monopsony in Labour Markets (2008)
Working Paper: The plant size-place effect: agglomeration and monopsony in labour markets (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0773

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