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Minimum Wages in Concentrated Labor Markets

Martin Popp ()
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Martin Popp: Institute for Employment Research (IAB), Nuremberg, Germany

No 202121, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "Economists increasingly refer to monopsony power to reconcile the absence of negative employment effects of minimum wages with theory. However, systematic evidence for the monopsony argument is scarce. In this paper, I perform a comprehensive test of monopsony theory by using labor market concentration as a proxy for monopsony power. Labor market concentration turns out substantial in Germany. Absent wage floors, a 10 percent increase in labor market concentration makes firms reduce wages by 0.5 percent and employment by 1.6 percent, reflecting monopsonistic exploitation. In line with perfect competition, sectoral minimumwages lead to negative employment effects in slightly concentrated labor markets. This effect weakens with increasing concentration and, ultimately, becomes positive in highly concentrated or monopsonistic markets. Overall, the results lend empirical support to the monopsony argument, implying that conventional minimum wage effects on employment conceal heterogeneity across market forms." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; Auswirkungen; Beschäftigungseffekte; Einkommenseffekte; IAB-Betriebs-Historik-Panel; Integrierte Erwerbsbiografien; Mindestlohn; Monopson; Niedriglohnbereich; Arbeitskräftenachfrage; 1999-2017 (search for similar items in EconPapers)
Pages: 107 pages
Date: 2021-12-22
New Economics Papers: this item is included in nep-com, nep-lab and nep-ure
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Published in/as: arXiv paper, doi:10.48550/arXiv.2111.13692

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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:202121

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