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Monopsony Makes Firms Not Only Small But Also Unproductive
Ruediger Bachmann
Christian Bayer
Heiko Stüber
Felix Wellschmied
其他書名
Why East Germany Has Not Converged
出版
SSRN
, 2022
URL
http://books.google.com.hk/books?id=4EkxzwEACAAJ&hl=&source=gbs_api
註釋
When employers face a trade-off between growing large and paying low wages -- that is, when they have monopsony power -- some productive employers will decide to acquire fewer customers, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity. Using high-quality administrative data from Germany, we document that East German plants (compared to West German ones) face a steeper size-wage curve, invest less into marketing, and remain smaller. A model with labor market monopsony, product market power, and customer acquisition matching these features of the data predicts 10 percent lower aggregate labor productivity in East Germany.
