Monopsony in labor markets: Not important in the aggregate

Sami Alpanda

Economic Modelling, 2025, vol. 152, issue C

Abstract: I construct a New Keynesian dynamic stochastic general equilibrium model, where labor market power and wage rigidities arise partly on the labor demand and partly on the labor supply side. In particular, households supply two types of labor, one where labor market power lies with households as in the standard setup and one where labor market power lies with firms (i.e., monopsony). Estimations using Bayesian likelihood methods indicate that the fit of the hybrid model is slightly better than the standard setup in the literature with labor market power modeled fully on the household side. However, the estimated share of labor operating in monopsonistic markets is relatively small (about 12%), and thus, the hybrid model generates very similar dynamics to the standard setup.

Keywords: Labor market power; Monopsony; Monopoly; New Keynesian DSGE model (search for similar items in EconPapers)
JEL-codes: E25 E32 L13 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S026499932500269X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:152:y:2025:i:c:s026499932500269x

DOI: 10.1016/j.econmod.2025.107274

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().