Monopsony: Wages, Wage Bargaining and Job Requirements

Anderlik Jasmin (), Jumaniyozova Malika (), Schmidpeter Bernhard () and Winter-Ebmer Rudolf ()
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Anderlik Jasmin: Ministry of Labor and the Economy, Vienna, Austria
Jumaniyozova Malika: Department of Economics, Johannes Kepler University of Linz, Linz, Austria
Schmidpeter Bernhard: IZA, Institute for the Study of Labor, Bonn, Germany
Winter-Ebmer Rudolf: Department of Economics, Johannes Kepler University of Linz, Linz, Austria

German Economic Review, 2025, vol. 26, issue 4, 395-420

Abstract: Using linked vacancy-employer-employee data from Austria, we investigate how monopsony power affects firms’ posting behavior and wage negotiations. Consistent with theoretical predictions, we find that firms with greater monopsony power post lower wages and offer fewer non-wage amenities, suggesting that wages and non-wage benefits are complementary. However, we find no evidence that monopsonistic firms demand higher levels of skill or education. Instead, our results indicate that they require more basic skills, particularly those related to routine tasks. On the workers’ side, we find that employees hired in monopsonistic labor markets face significantly lower wages, both initially and in the long run. These lower wages are driven by both lower posted wages and reduced bargaining power, as well as reduced opportunities to climb the wage ladder later.

Keywords: monopsony; wages; job amenities (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/ger-2024-0128

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