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Dealing with monopsony power: the case for using employment subsidies

Eric Strobl (eastrobl13@gmail.com) and Frank Walsh

No 2003079, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We show in a monopsony model that a minimum wage may raise hours which are already too high but has ambiguous effects on the number of employees and utility. Employment subsidies, in contrast, unambiguously improve worker utility and bring the market equilibrium closer to the efficient outcome.

Keywords: monopsony power; minimum wages; employment subsidies (search for similar items in EconPapers)
JEL-codes: J30 (search for similar items in EconPapers)
Date: 2003-11
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2003079

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