Estimating the Firm’s Labor Supply Curve in a “New Monopsony” Framework: Schoolteachers in Missouri

By Michael R Ransom, David P. Sims. Journal of Labor Economics, 2010

160 citations recorded by the source corpus.

In the context of certain dynamic models, 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 leverage the plausibly exogenous variation in prenegotiated district salary schedules to instrument for actual salary. These estimates imply a labor supply elasticity of about 3.7, suggesting that school districts possess significant market power. The presence of monopsony power in this teacher labor market may be partially explained by its institutional features.

Subfields: Education, Gender Studies, Media Technology

View Paper: https://www.semanticscholar.org/paper/e11e815dae53ccd9c548895ec2e145f9613343f6

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Education

1. Anna Sokolova
2. Todd Sorensen
3. Douglas A. Webber
4. Francine D. Blau
5. Lawrence M. Kahn

In Gender Studies

1. Francine D. Blau
2. Lawrence M. Kahn
3. Douglas A. Webber
4. Todd Sorensen
5. Anna Sokolova
6. Henry S. Farber
7. Ioana Marinescu
8. William B. Peterman

In Media Technology

1. Anna Sokolova
2. Todd Sorensen
3. Douglas A. Webber
4. Ioana Marinescu

Citations in the corpus

• The Elasticity of Labor Supply at the Establishment Level (2010, unknown): “Staiger et al. (2010, in this issue) argue that the employment of nurses is likely to be “supply constrained” because of nearly continuous reports of shortages of nurses since World War II. However, this is aggregated information, and variations in, for example, working conditions and workload may y”
• The Gender Wage Gap: Extent, Trends, and Explanations (2017, background): “On the other hand, Ransom and Oaxaca (2010) report some evidence consistent with the monopsony model as an explanation for gender wage differentials at a chain of grocery stores, as do Ransom and Sims (2010) for schoolteachers in Missouri.”
• Concentration in US labor markets: Evidence from online vacancy data (2020, background): “This is despite substantial evidence of market power in the labor market (Staiger, Spetz and Phibbs, 2010; Falch, 2010; Ransom and Sims, 2010).”
• Firm Market Power and the Earnings Distribution (2015, background): “Examining another market commonly thought to be monopsonistic, the market for schoolteachers, Ransom and Sims (2010) instrument wages with collectively 1See Mortensen (2003) or Rogerson et al. (2005) for a review of this literature 2The market labor supply elasticity corresponds to the decision of…”
• Labor Market Monopsony (2010, background): “This issue contains three studies that adopt the Manning approach of estimating the elasticity of the separation rate with respect to the wage: Hirsch, Schank, and Schnabel (2010); Ransom and Oaxaca (2010); and Ransom and Sims (2010).”
• Monopsony in Labor Markets: A Meta-Analysis (2020, methodology): “This approach is much more common, it was adopted, for example, in Ransom & Sims (2010), Booth & Katic (2011), Depew & Sørensen (2013) and others.”