Is There Monopsony in the Labor Market? Evidence from a Natural Experiment

Doug Staiger, Joanne Spetz () and Ciaran Phibbs

No 7258, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A variety of recent theoretical and empirical advances have renewed interest in monopsonistic models of the labor market. However, there is little direct empirical support for these models, even in labor markets that are textbook examples of monopsony. We use an exogenous change in wages at Veterans Affairs hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market. In contrast to much of the prior literature, we estimate that labor supply to individual hospitals is quite inelastic, with short-run elasticity around 0.1. We also find that non-VA hospitals responded to the VA wage change by changing their own wages.

JEL-codes: I11 J42 (search for similar items in EconPapers)
Date: 1999-07
New Economics Papers: this item is included in nep-ind and nep-lab
Note: EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Published as Douglas O. Staiger & Joanne Spetz & Ciaran S. Phibbs, 2010. "Is There Monopsony in the Labor Market? Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 211-236, 04.

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Journal Article: Is There Monopsony in the Labor Market? Evidence from a Natural Experiment (2010)
Working Paper: Is There Monopsony in the Labor Market? Evidence from a Natural Experiment (2008)
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