The wage-setting power of firms: Rent-sharing and monopsony in South Africa

Ihsaan Bassier

No wp-2019-34, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Using administrative tax records from South Africa for the period 2011-14, I find that firm wage premia explain 25 per cent of the total wage variance, 60 per cent of the gender wage gap, and 40 per cent of the gap between workers in the middle and the bottom of the income distribution. Next, I argue that in contrast to the rent-sharing literature, many studies of monopsony fail to use firm-level wage variation. I address this by using the estimated firm wage premia to estimate how wages are related to rent-sharing and monopsony power.

Keywords: Discrimination; Firm effects; Income inequality; Rent-sharing; Income distribution (search for similar items in EconPapers)
Date: 2019
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