Monopsonistic competition, low-wage labour markets, and minimum wages: An empirical analysis

Ronald Bachmann and Hanna Frings

No 599, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This paper investigates the degree of monopsony power of employers in different industries against the background of a statutory minimum wage introduction in Germany in January 2015. A semi-structural estimation approach is employed based on a dynamic model of monopsonistic competition. The empirical analysis relies on a linked employer-employee data set which allows to control for heterogeneity both on the worker and on the firm side. The results show important differences in monopsonistic competition among low-wage industries: Retailing as well as the hotel and restaurant industry can be described as monopsonistic labour markets, while this is not true for agriculture and mining as well as private and public services. From a policy point of view, the introduction of a uniform minimum wage may therefore lead to different employment reactions in industries with a similar wage structure.

Keywords: monopsony; labour supply; minimum wage; Germany (search for similar items in EconPapers)
JEL-codes: J31 J38 J42 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Monopsonistic competition, low-wage labour markets, and minimum wages – An empirical analysis (2017)
Working Paper: Monopsonistic Competition, Low-Wage Labour Markets, and Minimum Wages: An Empirical Analysis (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:599

DOI: 10.4419/86788695

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