Is low worker mobility evidence for monopsony power?

Major in Competition and Regulation

In this study, an assessment of the degree of worker mobility in the Portuguese Labor Market is performed by building on the dynamic monopsony literature. By producing firm-level estimates of the elasticity of the labor supply facing the rm, it is possible to conclude that workers have little sensitivity to real wage changes and, thus, that firms enjoy considerable wage-setting power. However, the extend to which one can relate such low worker mobility to monopsony power is severely questioned by first estimating the impact of the estimated measures of the labor supply elasticity on wages and by then assessing how such estimates correlate with three high-dimensional fixed effects - worker, firm and job title - taken from the standard Mincer equation.

NSBE - UNL