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The Elasticity of Labor Supply at the Establishment Level

Torberg Falch
Journal of Labor Economics
Vol. 28, No. 2, Modern Models of Monopsony in Labor Markets: Tests and Estimates. Papers from a Conference Held in Sundance, Utah, November 2008, Organized by Orley Ashenfelter, Henry Farber, and Michael Ransom. Alan Manning, Editor. Sponsored by Industrial Relations Section, Princeton University (April 2010), pp. 237-266
DOI: 10.1086/649905
Stable URL: http://www.jstor.org/stable/10.1086/649905
Page Count: 30
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Elasticity of Labor Supply at the Establishment Level
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Abstract

Monopsonistic wage‐setting power requires that the supply of labor directed toward individual establishments is upward sloping. This study utilizes institutional features to identify the supply curve. The elasticity of labor supply is estimated using data for the Norwegian teacher labor market in a period where the only variation in the wage level was determined centrally and with information on whether there is excess demand or not at the school level. In fixed‐effects models, the supply elasticity faced by individual schools is estimated to about 1.4 and is in the range 1.0–1.9 in different model specification.

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