Modelling Monospony on the Labor Market with Separable Matching Models

Pauline Corblet (pauline.corblet@nyu.edu) and Arnaud Dupuy (arnaud.dupuy@uni.lu)
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Pauline Corblet: NYU Abu Dhabi
Arnaud Dupuy: University of Luxembourg

No 17563, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We model monopsony on the labor market using a separable matching model a la Choo and Siow (2006). We propose a simple method that estimates 1) the multidimensional determinants of productivity and non-wage preferences separately and 2) the variance of unobserved heterogeneity on both sides of the market. Simulations show the effectiveness of the method. An application to Portuguese data reveals that the variance of unobserved heterogeneity is one order of magnitude larger for workers than for firms and represents about 29% of the variance in nonwage preferences of workers, while observed characteristics of workers and firms explain 71%.

Keywords: monopsony; amenities; matching models; unobserved heterogeneity; Pseudo-Poisson Maximum Likelihood (search for similar items in EconPapers)
JEL-codes: C25 C78 J28 J31 J32 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2024-12
New Economics Papers: this item is included in nep-lma
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