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Testing for Employer Monopsony in Turn-of-the-Century Coal Mining

William M. Boal
The RAND Journal of Economics
Vol. 26, No. 3 (Autumn, 1995), pp. 519-536
Published by: Wiley on behalf of RAND Corporation
Stable URL: http://www.jstor.org/stable/2556001
Page Count: 18
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Testing for Employer Monopsony in Turn-of-the-Century Coal Mining
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Abstract

Isolated company towns are often cited as likely examples of labor monopsony. This article tests for monopsony power by estimating inverse labor supply elasticities using a county-level panel dataset on nonunion West Virginia coal mining from 1897 to 1932. The model specification incorporates dynamics in such a way that an estimate of the gap between marginal revenue product and the wage can easily be computed as a weighted average of short- and long-run inverse elasticities. Modest estimated short-run inverse elasticities and very small long-run inverse elasticities imply that coal operators enjoyed little, if any, monopsony power over their workers.

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