Microeconomics · free preview
Unions, Monopsony and Power
A single buyer of labor hires less and pays less than the competitive benchmark, a union is labor's monopoly mirror, and a well-aimed minimum wage can raise both wage and employment where monopsony rules.
1. One employer in a town
One employer in a town
2. The minimum wage surprise
The minimum wage surprise
3. The union's monopoly
The union's monopoly
4. Power's policy map
Power's policy map
5. The monopsony outcome
A monopsonist faces upward-sloping labor supply. Why does its marginal cost of labor exceed the wage?
6. The minimum wage under monopsony
Why can a modest minimum wage raise employment in a monopsony labor market?
7. The competitive yardstick
A competitive town would employ 50 nurses at 80 thousand a year. The monopsonist hospital employs 40 nurses at 60 thousand. Compute the total shortfall in the hospital's wage bill relative to the competitive benchmark, in millions of dollars.
8. The curve above the curve
A monopsonist faces upward-sloping labor supply. Why does its marginal cost of labor exceed the wage?
9. The minimum wage's surprise
Why can a modest minimum wage raise employment in a monopsony labor market?
10. The employment shortfall
A competitive town would employ 60 nurses at 90 thousand a year, but the monopsonist hospital hires only 45 at 75 thousand. Compute the employment shortfall in nurses, and write the number.
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