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 indenser markets. However, many popular theories of agglomeration - spillovers, costadvantages and improved match quality - predict that establishments should be smaller incities. The paper proposes a theory based on monopsony in labour markets that can explainthe stylized fact - that firms in all labour markets have some market power but that they haveless market power in cities. It also presents evidence that the labour supply curve toindividual 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)
New Economics Papers: this item is included in nep-bec, nep-geo, nep-ltv and nep-ure
Date: 2007-01
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http://cep.lse.ac.uk/pubs/download/dp0773.pdf (application/pdf)

Related works:
Working Paper: The Plant Size-Place Effect: Agglomeration and Monopsony in Labour Markets (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:cep:cepdps:dp0773

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