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Estimating the Firm's Labor Supply Curve in a "New Monopsony" Framework: School Teachers in Missouri

Michael Ransom () and David P. Sims ()
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David P. Sims: Brigham Young University

No 4271, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In the context of certain dynamic models, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. Using this property, we estimate the average labor supply elasticity to public school districts in Missouri. We take advantage of the plausibly exogenous variation in pre-negotiated district salary schedules to instrument for actual salary. Instrumental variables estimates lead to a labor supply elasticity estimate of about 3.7, suggesting the presence of significant market power for school districts, especially over more experienced teachers. The presence of monopsony power in this labor market may be partially explained by institutional features of the teacher labor market.

Keywords: labor monopsony; teachers (search for similar items in EconPapers)
JEL-codes: J42 J63 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2009-06
New Economics Papers: this item is included in nep-lab and nep-ure
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Published - published in: Journal of Labor Economics, 2010, 28 (2), 331 - 335

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Journal Article: Estimating the Firm's Labor Supply Curve in a "New Monopsony" Framework: Schoolteachers in Missouri (2010) Downloads
Working Paper: Estimating the Firm's Labor Supply Curve in a "New Monopsony" Framework: School Teachers in Missouri (2008) Downloads
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