Saturday 25 July 2009

Labour market oligopsonistic competition: ...

the effect of worker immobility on wages

an article by Marios Michaelides (IMPAQ International, Labor Research Division) in Labour Economics

Abstract

We suggest that firms in a local labour market may be able to exploit worker mobility costs and offer immobile workers wages that are lower than their marginal product. If so, the ability of employers to exploit worker immobility in setting wages would decline in the competitiveness of the local labour market. We test this intuition using a measure of individual mobility costs and measures of local labour market competition. Our findings suggest that worker immobility causes substantial wage variation across workers in small, weakly competitive markets, and in occupations where wages are individually bargained.

Hazel’s comment:
Intrigued by a word in the title of this article that was completely outwith my vocabulary I set out to track down a meaning which allowed me to make sense of the article.

Thank you, Google, for your “define:” feature.
oligopsony – similar to an oligopoly, but where a small number of large buyers (not sellers) control a large proportion of the market and drive prices down. investors.saic.com/glossary.cfm

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