THE EMPLOYER SIZE-WAGE EFFECT: CAN DYNAMIC MONOPSONY PROVIDE AN EXPLANATION?

In this paper we argue that a dynamic monopsony model (basedon labour market frictions) predicts a positive relationshipbetween wages and employer size, but also that the effect willbe larger in the non-union sector than in the union sector,and larger for women than for men. We examine evidence on theemployer size-wage effect using several microeconomic data sources,and find it to be generally consistent with these predictions.After examining other theoretical explanations, our conclusionis that at least part of the employer size-wage effect is aresult of monopsony power in the labour market.     

Monopsony in the Labor Market,Minimum Wages and the Time Horizon: Some Unresolved Issues

This article discusses development of optimal solutions for monopsony in the labour market for the long run (when labour and capital are both flexible). It is shown that binding minimum wages up to a certain degree pushes the monopsonists to choose a high capital intensity of production, just as high as or even higher than that chosen when there is no regulation for minimum wages. Thereby, we demonstrate the existence of re-switching effects in the tradition of Piero Sraffa. The second part of the paper recalculates and analyzes earlier results by making use of the rather general constant elasticity of substitution production function. Based on a numerical solution for optimal monopsony under different regimes (no minimum wage, minimum wages of different values, etc.), we formulate a two-period game between the government and the monopsonistic firm (‘minimum wage game’). Finally, we analyze the relationship between the elasticity of substitution on the one hand and likely levels of employment on the other hand, after introduction of minimum wages.     

Product market competition, job security, and aggregate employment

Standard economic wisdom generally stresses the benefits ofincreased competition on the product market. This paper proposesa model of monopolistic competition with an endogenous determinationof workers flows in and out of unemployment, where wages aredetermined according to an efficiency wage mechanism. We showthat an increase in product market competition boosts the hiringrate as well as the separation rate thus reducing job security.Hence, the efficiency wage schedule compatible with more competitionshifts upward. An adverse effect on workers' incentive is atwork which pushes real wages up to the point that increasedcompetition may indeed generate employment losses rather thangains.     

Labor market concentration and heterogeneous effects on wages: Evidence from Japan

This study provides empirical evidence of the impact of labor market concentration on wages. We find that (1) wages are suppressed in more concentrated labor markets, (2) labor rigidity is associated with wage responsiveness to labor market concentration, (3) the impact of labor market concentration on wages is smaller for firms with more competitive downstream product markets, and (4) greater job opportunities outside the manufacturing sector weaken the relationship between concentration and wages. In sum, our findings indicate that labor rigidity and the degree of competition in downstream product markets, as well as outside options, affect the relationship between market concentration and wages.     

Deindustrialization in 18th and 19th century India: Mughal decline, climate shocks and British industrial ascent

India was a major player in the world export market for textiles in the early 18th century, but by the middle of the 19th century it had lost all of its export market and much of its domestic market, primarily to Britain. The ensuing deindustrialization was greatest c1750-c1860. We ask how much of India’s deindustrialization was due to local supply-side forces—such as political fragmentation and a rising incidence of drought, and how much to world price shocks. An open, three-sector neo-Ricardian model organizes our thinking and a new relative price database implements the empirical analysis. We find local supply side forces were important from as early as 1700. We then assess the size of Indian deindustrialization in comparison with other parts of the periphery.     

Social Welfare in Sports Leagues with Profit‐Maximizing and/or Win‐Maximizing Clubs

This article develops a contest model to compare social welfare in homogeneous leagues in which all clubs maximize identical objective functions with mixed leagues in which clubs maximize different objective functions. We show that homogeneous leagues in which all clubs are profit maximizers dominate all other leagues. Mixed leagues in which small‐market clubs are profit maximizers and large‐market clubs are win maximizers (type‐I mixed leagues) are dominated by all other leagues. From a welfare perspective, large‐market clubs win too often in (purely) win‐maximizing and type‐I mixed leagues; whereas, small‐market clubs win too many games in (purely) profit‐maximizing leagues and in mixed leagues in which large‐market clubs are profit maximizers and small‐market clubs are win maximizers (type‐II mixed leagues). These results have important policy implications: Social welfare will increase if clubs are reorganized from non‐profit member associations to profit‐maximizing corporations. Moreover, we show that revenue sharing decreases (increases) social welfare in mixed (homogeneous) leagues.     

Wage discrimination in the NBA: Evidence using free agent signings

This article takes a step toward understanding potential causes of wage discrimination in an economy highly dependent on the service industry. Traditionally categorized within the service industry, professional sport leagues such as the National Basketball Association (NBA) provides a unique setting to examine the potential impact of race on salary. We analyze free agency contract signings, which allow us to better capture the determinants of players' wages, from 2011 to 2017 to investigate the prominence of wage discrimination in the NBA. Using weighted linear regression models and the Oaxaca–Blinder decomposition, we find that Black athletes are paid significantly less than their counterparts. In addition, we also identify the presence of consumer discrimination after controlling the exposure of a player to the audience, which is observed through the interaction term between the share of MSA population which is White and an identifier for whether a player is Black.     

Risk Aversion and Wages: Evidence from the Baseball Labor Market

We develop a bargaining model to assess how workers and employers might allocate wages inter-temporally in order to cope with risk. We then apply this model to 106 long-term contracts for major league baseball players’ services. Most of these agreements not only smooth employee compensation over time but suggest greater relative risk aversion for teams than players. Compared to the wages they might pay to retain these players on a succession of one-year contracts, teams often pay a premium on longer-term agreements to protect against market volatility and potential inability to replace a key player on the open market.     

Product market competition, unemployment and income disparities

Product Market Competition, Unemployment and Income Disparities. — We discuss how promoting competition in product markets affects unemployment and wage differentials. We examine a general equilibrium model with real wage rigidities in labor markets and market power in product markets. We illustrate how more intense competition reduces unemployment. A decrease of markups would induce an increase of real wages if real wages were flexible. This enables the employment of more low-skilled people above a real reservation wage. More intensive competition, however, widens wage and income differences between low-skilled and high-skilled workers. Differences of income distributions across countries could also be caused by differences in the intensity of product market competition.     

Freedom of Entry,Market Size,and Competitive Outcome: Evidence from English Soccer

A primary prediction of the theory of sports leagues is that teams with higher revenues will have higher league positions or winning percentages than teams with smaller revenues. Behind this prediction lies the key influence of market size, yet this has been underexplored in the empirical literature on sports leagues. This paper combines detailed census of population data with panel data on team performance for an open sports league, the English Football League, to test the hypothesis that market size matters for team performance. We find a particularly important role for population close to the team's location. The impact of local population is reduced but not eliminated when allowance is made for entry in the form of competition from neighboring clubs. We assess implications of these findings for both European and North American sports league structures.     

Do high profits imply low wages?

Summary It is argued in this paper that, contrary to what may be commonly believed, high wages are not inconsistent with monopsony power (neoclassical exploitation). In fact, it is argued, when a monopsonistic firm has economically profitable product-market monopoly power, which would seem to be the typical real world case, the firm's wages are expected to be high. Clearly, the situation described by the combination of profitable monopoly-monopsony conditions explains a high wage insofar as these conditions represent a profit opportunity which provides an incentive to pay a high wage and without which the high wages would not be offered or paid. Empirical evidence based on an exhaustive sample is offered which, although not over-whelmingly convincing, tends to support the theoretical arguments of this paper.     

Does Manufacturer Advertising Crowd‐in or Crowd‐out Retailer Advertising? An Application of an Endogenous Prize Contest with Asymmetric Players

When a manufacturer advertises, what is the impact on retailer advertising? I analyze a contest model of advertising where total advertising by the manufacturer and by retailers determines market size, and the relative level of advertising by each retailer determines market share. If retailers are symmetric I show that there is a crowding‐in effect so increased manufacturer advertising increases retail advertising. But if one retailer is stronger, then marginal increases in manufacturer advertising have a crowding‐out effect on retailer advertising, while sufficiently large increases have a crowding‐in effect by “jump‐starting” competition between retailers for the larger market. Furthermore, asymmetric abilities in such contests can lead the weaker player to effectively drop out of the contest, thereby undermining the ability of increased prizes to increase effort by intensifying competition.     

Market Structure and Audit Fees: A Local Analysis*

This study conducts a local analysis of the relation between market structure and audit fees. The research question of interest to us is how audit fees are determined by each practicing local office, after taking into account the auditor's own position in a local market and the influence exerted by his or her clients. Appealing to the economic theories of monopoly and monopsony power, we hypothesize a positive audit fee‐concentration relation, and a negative audit fee‐client influence relation. Results indicate that auditor market concentration is positively associated with the non‐Big 6 audit fees but is unrelated to the Big 6 audit fees. Evidence is mixed concerning the client influence hypothesis. When this construct is proxied by the number of rival auditors operating within a geographic area centered on the municipality, the prediction of negative audit fee‐client influence relation is strongly supported for both groups of auditors. Results are much weaker using measures developed based on the relative importance of a municipal client to its auditor's audit portfolio. The issues addressed in this study are important at a time when the Canadian municipal sector is undergoing major changes because of municipal amalgamation, altering the underlying market structure for audit services and the bargaining position of a municipality vis‐Ã‐vis its auditor. More broadly speaking, our analysis implies that when assessing an auditor's report for signs of client pressure, the professional oversight bodies and regulatory authorities need to consider the relative, rather than the absolute, bargaining position of the client in question.     

学习型员工——企业核心竞争力的源泉

伴随着知识经济时代的到来,知识更新的速度越来越快,知识逐渐成为经济增长的源动力。作为知识产品直接创造者和受益者的企业如何应对日益激烈的市场竞争和不断变化的生存环境,唯一的选择便是重视知识、学习知识,以学习求创新,以创新求发展。21世纪最成功的企业将会是“学习型企业”。因为未来唯一持久的优势,是有能力比你的竞争对手学习得更快。而人才是企业生存和发展的基础资源。知识只有被具备学习能力的人才应用到实际工作中创造出价值时,才能成为一种资产。所以培育学习型的员工是建立学习型企业的起点。本文就是在分析学习型员工的特点的基础上,探讨企业如何通过招聘、培训及创造适宜学习的环境来培育具有“学习力”的员工。     

The changing fortunes of an aristocracy? Determinants of wages and conditions of employment in Kenya

This article examines the functioning of the labour market in the modern sector in Kenya and, in particular, considers the determinants of wages and other conditions of employment. An analysis of negotiated wages from collective agreements signed during 1974–75 suggests that measures of an ‘ability to pay’ characteristic of industries with limited competition in the product market and realizing above-average labour productivity are the best predictors of inter-industry wage differences. Locational and ownership variables are also found to be significant. Size of labour force is only significant for clerical wage rates. Four case studies suggest superior conditions of employment are positively associated with higher than average wages.     

Corruption Via Media Capture: The Effect of Competition

In this article, we compare a government's optimal choice of whether to engage in corruption by capturing the media outlets through bribery in two alternative media market structures: monopoly versus duopoly. While there is an extra bribe claimant in a media duopoly relative to monopoly, it may also be harder for each firm to individually expose corruption when the rival co‐opts with the government. We find that when the latter effect is stronger than the former, media is captured at lower bribes under duopoly relative to monopoly and in such instances media competition facilitates rather than hindering corruption.     

The Differential Impact of Accurate Product Cost Information in Imperfectly Competitive Markets: A Theoretical and Empirical Investigation*

Many researchers claim that costing systems that provide materially more accurate or precise cost reports have a strict value-enhancing effect on decisions (i.e., Cooper 1988, 1995; Cooper and Kaplan 1991; Christensen and Sharp 1994; Rogers. Comstock. and Pritz 1994; Swenson 1995; Gupta and King 1997). However, this study provides theoretical and empirical evidence that the value of more accurate cost information may be dependent upon the firm's competitive market structure, as well as the firm's product market strategy. We extend the theoretical work of Gal-Or 1986 to incorporate an endogenous imprecise cost signal in two imperfect market structures: Cournot competition and Bertrand competition with imperfectly substitutable products. In addition, we theoretically link market structure to product market strategy. To examine product market strategy, we employ a laboratory markets design that allows for strategic reaction by a rival firm in each of these markets, because the competitive position of a firm is determined by its capacity to produce at low cost, or to differentiate its product from other products (Porter 1985). Consistent with our theoretical work, we argue that firms that compete on the basis of cost leadership (which we demonstrate may be characterized as Cournot competition), benefit through increased profits from increased product cost accuracy, whereas firms that compete on the basis of product differentiation (which we demonstrate may be characterized as Benrand competition) do not benefit from such increased product cost accuracy. Our results are consistent with this contention. That is, profit is higher in the experimental cost leadership markets (operationalized as Cournot markets) when subjects know their true cost, while profit is higher in the experimental product differentiation markets (operationalized as Bertrand markets) when subjects receive uninformative cost reports and make their decisions based on expected costs. These results suggest that the value of more accurate cost reports may be dependent upon the firm's competitive market structure strategy and product market strategy.     

Modernization, weather variability, and vulnerability to famine

This paper shows that under weather variability the transformation from a rural to an incomplete market economy can increase the vulnerability of peasants to famine. This can occur even if improvements in technology have raised agricultural productivity and made production less responsive to weather variability. Indeed, negative environmental shocks can produce a drop in wages that outweighs the increase in wages due to an equivalent positive environmental shock. Consequently, the amount of grain stored increases more slowly in good seasons than it decreases in bad ones. This paper gives new insights on the catastrophic effects produced by widespread droughts in India during the second half of the 19th century. Notwithstanding the introduction of new modes of production and the modernization of infrastructures, the interaction between environmental variability and new institutional arrangements might have contributed to increase the vulnerability of peasants to famine.     

Decentralization and Transfer Pricing Under Oligopoly

This paper presents a simple model of a partially decentralized multinational firm (MNF) in competition with a rival firm. It is shown that transfer pricing can be used as a rent-shifting device by the MNF to compete with the rival. This arises because the MNF headquarters uses the transfer price to manage different subsidiaries. The specific value of the transfer price chosen by the MNF depends on whether the rival firm produces the intermediate good, the final good, or both and whether the rival is integrated or not. In particular, both decentralization and competition with a fully integrated rival result in lower transfer prices.     

Football transfer fee premiums and Europe's big five

This article studies the transfer market for international football players. Analyzing a sample of 5,760 player transfers over 14 years, we provide evidence that clubs in English football pay larger transfer fee premiums compared to clubs in the top leagues of France, Germany, Italy, and Spain. While the popular press often mentions the English premiums, we empirically demonstrate both their existence and their causal source. Using annual data, we show that the dramatic increase in English premiums is causally linked to the 2012 television contracts the EPL signed with domestic and international broadcasters. These findings have policy implications for the clubs, players, and governing bodies of European football, as well as indirect consequences for export‐oriented football clubs.