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

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. We use an exogenous change in wages at Department of Veterans Affairs (VA) hospitals as a natural experiment to investigate...

Full description

Saved in:
Bibliographic Details
Published inJournal of labor economics Vol. 28; no. 2; pp. 211 - 236
Main Authors Staiger, Douglas O., Spetz, Joanne, Phibbs, Ciaran S.
Format Journal Article
LanguageEnglish
Published Chicago The University of Chicago Press 01.04.2010
University of Chicago, acting through its Press
Subjects
Employment
Hospital administration
Hospitals
Labor market
Labor markets
Labor supply
Labor supply elasticity
Monopsony
Nurses
Registered nurses
Studies
Wage surveys
Wages
Wages & salaries
United States > US
Online AccessGet full text

Cover

More Information
Summary: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. We use an exogenous change in wages at Department of Veterans Affairs (VA) hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market. 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.
ISSN:0734-306X
1537-5307
DOI:10.1086/652734