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

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

No 1108, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: In the context of certain dynamic models of monopsony, 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 3.65, suggesting the presence of significant market power for school districts, especially over more experienced teachers. This is partially explained by institutional features of the teacher labor market.

Keywords: monopsony papers; labor supply elasticity; public schools; Missouri (search for similar items in EconPapers)
JEL-codes: I11 J42 L13 (search for similar items in EconPapers)
Date: 2008-12
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https://dataspace.princeton.edu/bitstream/88435/dsp011831cj94z/1/538.pdf

Related works:
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 (2009) Downloads
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