nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒10‒29
twenty papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. On the Ricardian invariable measure of value in general convex economies By Kazuhiro Kurose; Naoki Yoshihara
  2. A Path Integral Approach to Business Cycle Models with Large Number of Agents By Pierre Gosselin; Aïleen Lotz; Marc Wambst
  3. The Geography and Concentration of Authorship in the Top Five: Implications for European Economics By Ek, Simon; Henrekson, Magnus
  4. Exploitation, skills, and inequality By Jonathan Cogliano; Roberto Veneziani; Naoki Yoshihara
  5. The theory of exploitation as the unequal exchange of labour By Roberto Veneziani; Naoki Yoshihara
  6. The measurement of labour content: a general approach By Naoki Yoshihara; Roberto Veneziani
  7. Transitioning towards more equality? Wealth gender differences and the changing role of explanatory factors over time By SIERMINSKA Eva; PIAZZALUNGA Daniela; GRABKA Markus
  8. The Gender Gap in Citations: Lessons from Demographic Economics Journals By Shoshana Grossbard; Tansel Yilmazer; Lingrui Zhang
  10. From income poverty to multidimensional poverty?an international comparison By Francesco Burchi; Nicole Rippin; Claudio E. Montenegro
  11. "Two Harvard Economists on Monetary Economics: Lauchlin Currie and Hyman Minsky on Financial Systems and Crises" By Ivan D. Velasquez
  12. Long-term care, ageing and gender in the Greek crisis By Lyberaki, Antigone; Tinios, Platon
  13. The dynamics of exploitation and inequality in economies with heterogeneous agents By Giorgos Galanis; Roberto Veneziani; Naoki Yoshihara
  14. Animal Spirits - Die Verhaltensökonomischen Grundlagen der Keynesschen Theorie By Ronald Schettkat
  15. Closing Gender Gaps in India: Does Increasing Womens’ Access to Finance Help? By Purva Khera
  16. New Productivity Concept Based on Local Wisdom: Lessons from Indonesia By Hanif Hanif
  17. Towards a Transdisciplinary View: Innovations in Higher Education By Jonathan Appel; Dohee Kim-Appel
  18. Virginie Maris, Nature à vendre – les limites des services écosystémiques By Jean-Michel Salles
  19. Social and solidarity economy. Toward a territorial symbiosis. By Cécile Perret
  20. Monopsony in the UK By Will Abel; Silvana Tenreyro; Gregory Thwaites

  1. By: Kazuhiro Kurose (Tohoku University); Naoki Yoshihara (School of Economics and Management, Kochi University of Technology)
    Abstract: This study examines the possibility of an invariable measure of value when price changes induced by income redistribution between profit and wages take place in general convex economies. While Ricardo searched for an invariable measure of value with respect to changes in both the factor income distribution and the technique, Sraffa constructed a standard commodity serving as a measure of the change in a factor income distribution alone by leaving aside the possibility of changes in the size and composition of output and means of production. This study allows for the possibility that a change in factor income distribution involves a change in technique, and proposes an extension of Sraffa’s standard commodity. Then, we show that it serves as an invariable measure of value with respect to the income redistribution, even though it involves a change in technique. Finally, we examine whether the linear distributional relation is preserved.
    Keywords: Ricardo’s invariable measure of value, Sraffa’s standard commodity, Linear relation of factor income distribution, General convex economies
    JEL: B51 D33 D51
    Date: 2018–10
  2. By: Pierre Gosselin (IF - Institut Fourier - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Aïleen Lotz (Cerca Trova - Université de Lille, Sciences Humaines et Sociales); Marc Wambst (IRMA - Institut de Recherche Mathématique Avancée - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper presents an analytical treatment of economic systems with an arbitrary number of agents that keeps track of the systems' interactions and agents' complexity. This formalism does not seek to aggregate agents. It rather replaces the standard optimization approach by a probabilistic description of both the entire system and agents'behaviors. This is done in two distinct steps. A first step considers an interacting system involving an arbitrary number of agents, where each agent's utility function is subject to unpredictable shocks. In such a setting, individual optimization problems need not be resolved. Each agent is described by a time-dependent probability distribution centered around his utility optimum. The entire system of agents is thus defined by a composite probability depending on time, agents' interactions and forward-looking behaviors. This dynamic system is described by a path integral formalism in an abstract space-the space of the agents' actions-and is very similar to a statistical physics or quantum mechanics system. We show that this description, applied to the space of agents'actions, reduces to the usual optimization results in simple cases. Compared to a standard optimization, such a description markedly eases the treatment of systems with small number of agents. It becomes however useless for a large number of agents. In a second step therefore, we show that for a large number of agents, the previous description is equivalent to a more compact description in terms of field theory. This yields an analytical though approximate treatment of the system. This field theory does not model the aggregation of a microeconomic system in the usual sense. It rather describes an environment of a large number of interacting agents. From this description, various phases or equilibria may be retrieved, along with individual agents' behaviors and their interactions with the environment. For illustrative purposes, this paper studies a Business Cycle model with a large number of agents.
    Keywords: path integrals,statistical field theory,business cycle,budget constraint,multi-agent model,interacting agents
    Date: 2018–10–11
  3. By: Ek, Simon (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: We study to what degree authors who publish in the five most prestigious journals in economics have previously published there and in which world region they are based. Al­though still high, the concentration of U.S.-based and previously published top-five authors has decreased. This trend is driven by increased co-authorship between U.S. and non-U.S. scholars and between scholars with and without previous top-five articles. Only around 5 percent of all articles each year are written solely by first-time authors from outside the U.S., and this share has not increased since the mid-1990s. Against this background, we argue that European institutions should be wary of putting too much emphasis on publishing in these five journals. Both the advancement and diversity of the economics discipline may otherwise suffer.
    Keywords: Bibliometrics; Impact of research; Ranking; Research output; Research productivity
    JEL: A11 A13 A14 B41
    Date: 2018–10–10
  4. By: Jonathan Cogliano (Dickinson College); Roberto Veneziani (Queen Mary University of London); Naoki Yoshihara (School of Economics and Management, Kochi University of Technology)
    Abstract: This paper uses a computational framework to analyse the equilibrium dynamics of exploitation and inequality in accumulation economies with heterogeneous labour. A novel index is presented which measures the intensity of exploitation at the individual level and the dynamics of the distribution of exploitation intensity is analysed. Various taxation schemes are analysed which may reduce exploitation or inequalities in income and wealth. It is shown that relatively small taxation rates may have signifi cant cumulative effects on wealth and income inequalities. Further, taxation schemes that eliminate exploitation also reduce disparities in income and wealth but in the presence of heterogeneous skills, do not necessarily eliminate them. The inegalitarian effects of different abilities need to be tackled with a progressive education policy that compensates for unfavourable circumstances.
    Keywords: Exploitation, heterogeneous labour, wealth taxes, computational methods
    JEL: B51 C63 D31
    Date: 2018–10
  5. By: Roberto Veneziani (Queen Mary University of London); Naoki Yoshihara (School of Economics and Management, Kochi University of Technology)
    Abstract: This paper explores the foundations of the theory of exploitation as the unequal exchange of labour (UEL). The key intuitions behind all of the main approaches to UEL exploitation are explicitly analysed as a series of formal axioms in a general economic environment. Then, a single domain condition called Labour Exploitation is formulated, which summarises the foundations of UEL exploitation theory, defines the basic domain of all UEL exploitation forms, and identifies the formal and theoretical framework for the analysis of the appropriate definition of exploitation.
    Keywords: Exploitation, Unequal Exchange of Labour, axiomatic analysis
    Date: 2018–10
  6. By: Naoki Yoshihara (School of Economics and Management, Kochi University of Technology); Roberto Veneziani (Queen Mary University of London)
    Abstract: This paper analyses the theoretical issues related to the measurement of the amount of labour used in the production of — or contained in — a bundle of goods for general technologies with heterogeneous labour. A novel axiomatic framework is used in order to formulate the key properties of the notion of labour content and analyse its theoretical foundations. The main measures of labour content used in various strands of the literature are then characterised. Quite surprisingly, a unique axiomatic structure can be identified which underlies measures of labour aggregates used in such diverse fields as neoclassical growth theory, input-output approaches, productivity analysis, and classical political economy.
    Keywords: labour content, labour productivity, technical change, axiomatic analysis
    JEL: D57 J24 O33
    Date: 2018–10
    Abstract: We investigate the explanatory factors that have contributed to changing wealth levels and the gender wealth gap in Germany over the period 2002-2012. In particular, we analyze the role of changes in labor supply, permanent income, portfolio composition, and marital status on wealth accumulation. Using individual level micro data from the German Socio-Economic Panel results show that real mean wealth levels for the working age population have been decreasing for both women and men since 2002 and that the wealth gap has decreased by 13.5% to 30.700?. We show that the increased participation of women in the labor market and their occupational structure had an increasing positive role on women?s wealth accumulation. Making use of the panel dimension in the data and of Oaxaca-Blinder and Firpo, Fortin, Lemieux decompositions, in comparison to previous analyses, a diminishing role of permanent income is observed, due both to a reduction in the gender difference in permanent income and in gender differences in its returns. Overall, the evidence points to more equal wealth accumulation both in terms of characteristics and returns.
    Keywords: Wealth differences; Gender; SOEP; decomposition; labor supply; occupations
    JEL: D13 D31
    Date: 2018–10
  8. By: Shoshana Grossbard (San Diego State University); Tansel Yilmazer (Ohio State University); Lingrui Zhang (University of Waterloo)
    Abstract: This paper investigates gender differentials in citations of articles published in two journals specialized in Demographic Economics, a field that has traditionally attracted relatively large numbers of women researchers. In contrast to findings based on citations of top economics journals, we find a gender gap in citations favoring women among articles published in the Journal of Population Economics (JPOP) or the Review of Economics of the Household (REHO) between 2003 and 2014 . If the corresponding author is male, having at least one female co-author boosts citations. Across subfields of demographic economics, citations of female authors increase as female representation in the subfield increases. The gender gap in citations favoring women is not found for authors with limited experience past graduate school, which supports an explanation for the gender gap based on authors’ prior experience with economics journals of higher rank.
    Keywords: citations, gender gap
    JEL: A14 I23 D10 J10 J16
    Date: 2018–10
  9. By: Jasmeet Gulati (O.P. Jindal Global University)
    Abstract: In any homogeneous or heterogeneous society, reference to ?others? is not only to those who have been internally displaced or have entered as refugees or migrants, but also to those who are not identifiable as belonging to that society. The reasons could be many-fold; including different culture, nationality, gender, and so on. These differences are commonly known. But otherness can also be distinguished because of certain features which are outside this realm i.e. those who are not in power or place of authority, or those who are having a belief or ideology which donot form part of the larger group. They are unable to integrate with society because not only have they lost their identity but their assimilation has also been restricted by the ?majority?. These ?others? are not accepted as part of ?us? where the society is in a superior position so as to be able to stop ?others? from being ?us?. Since the ?others? are not accepted in the mainstream, their vulnerability leads to denial of basic rights which form part of those rights that are recognized as human rights. The paper will be divided into four parts. The first part will explore the reality of ?otherness? amongst human beings which is not only because of majority-minority based reasoning. The second part of the paper will discuss the human rights aspect of the concept of otherness, because the moment we distinguish a group as others, we violate their human rights. The part will highlight the basic rights of the migrants being violated which are recognized under the UDHR e.g. right to asylum. It will also focus on the principle of non-refoulement which is now a rule of customary international law.Part three will highlight the plight of refugees owing to the indifference of Governments towards them. The case of Syrian crisis in Europe will be analogized with the Rohingya refugee crisis in India. The political setting of a developing state like India will also be discussed. The plight of internally displaced persons will also be reflected upon to draw a contrast to the situation in Europe. In conclusion, part four of the paper will focus on implementation of human rights i.e. whether recognizing ?others? amongst ?us? will be antithesis to the concept of human rights in the light of Refugee Convention 1951 which has already distinguished refugees as others.
    Keywords: Human Rights of Refugees, Refugee Convention, Others amongst Us
    JEL: K33
    Date: 2018–07
  10. By: Francesco Burchi (IPC-IG); Nicole Rippin (IPC-IG); Claudio E. Montenegro (IPC-IG)
    Abstract: "The first Sustainable Development Goal of the 2030 Agenda calls for ending 'poverty in all its forms everywhere', therefore recognising that poverty is more than just a lack of a sufficient income. Nevertheless, some scholars argue that an income-based measure of poverty is able to sufficiently capture poverty in other dimensions as well. This claim, however, has so far not been substantiated by any cross-country empirical evidence. Currently available international indicators of multidimensional poverty suffer from several weaknesses and cannot be directly compared with the existing monetary measures of poverty. This One Pager summarises the main findings of a broader study (Burchi, Rippin, and Montenegro 2018) on poverty measurement and analysis". (...)
    Keywords: Income, poverty, multidimensional, international, comparison
    Date: 2018–09
  11. By: Ivan D. Velasquez
    Abstract: In November 1987, Hyman Minsky visited Bogota, Colombia, after being invited by a group of professors who at that time were interested in post-Keynesian economics. There, Minsky delivered some lectures, and Lauchlin Currie attended two of those lectures at the National University of Colombia. Although Currie is not as well-known as Minsky in the American academy, both are outstanding figures in the development of non-orthodox approaches to monetary economics. Both alumni of the economics Ph.D. program at Harvard had a debate in Bogota. Unfortunately, there are no formal records of this, so here a question arises: What could have been their respective positions? The aim of this paper is to discuss Currie's and Minsky's perspectives on monetary economics and to speculate on what might have been said during their debate.
    Keywords: Lauchlin Currie; Hyman Minsky; Monetary Economics; Monetary Policies; Fiscal Policies
    JEL: B22 B31 B50 E12 E50
    Date: 2018–10
  12. By: Lyberaki, Antigone; Tinios, Platon
    Abstract: This paper examines Long Term Care (LTC) in Greece over the crisis. It does so through examining micro data from the 2007 and 2015 waves of the Survey of Health, Ageing and Retirement and Europe (SHARE. The crisis was exceptionally deep and involved retrenchments in public welfare, superimposed on a familial LTC system. Hence, the ‘austerity narrative’, expects cutbacks to have led to deteriorating outcomes and to rising informal provision. The empirical investigation casts doubt on these expectations: First, LTC needs did not rise, despite a deterioration in health. Second, ‘care gaps’ – people declaring need who receive no care – shrank, despite austerity. Third, it was (paid) professional care, rather than informal care which rose, despite the familial LTC system. Fourth, care in the last year of life is a further drain on family finances. The paper concludes with thoughts on whether expecting the family to keep delivering is a sustainable LTC medium term policy in the face of ageing.
    Keywords: Greece; long term care; care needs; austerity; gender; financial crisis
    JEL: N0
    Date: 2018–09
  13. By: Giorgos Galanis (University of London); Roberto Veneziani (Queen Mary University of London); Naoki Yoshihara (School of Economics and Management, Kochi University of Technology)
    Abstract: This paper analyses the relation between growth, inequalities, and exploitation as the unequal exchange of labour (UE exploitation). An economy with heterogeneous, intertemporally optimising agents is considered which generalises John Roemer's [52, 53] seminal models. First, a correspondence between pro ts and the existence (and intensity) of UE exploitation is proved in the dynamic context. This result is important, positively, because the pro t rate is one of the key determinants of investment decisions, and, normatively, because it provides a link between UE exploitation and the functional distribution of income. Second, it is shown that asset inequalities are fundamental for the emergence of UE exploitation, but they are not sufficient for its persistence, both in equilibria with accumulation and growth, and, perhaps more surprisingly, in stationary intertemporal equilibrium paths. Labour-saving technical progress, however, may yield sustained growth with persistent UE exploitation by keeping labour abundant relative to capital. Persistent inequalities in income and labour exchanged arise from the interaction between labour market conditions and differential ownership of productive assets.
    Keywords: Dynamics, accumulation, exploitation, inequalities
    JEL: D51 D63 C61 E11
    Date: 2018–10
  14. By: Ronald Schettkat
    Abstract: Keynes' General Theory (GT) ist in zweierlei Hinsicht umfassender als das (neo-) klassische Modell - (1) sie schließt das Vollbeschäftigungsgleichgewicht als Sonderfall ein und (2) sie basiert auf realistischem mikroökonomischem Verhalten, dessen sozial isolierter, den Eigennutz maximierender homo oeconomicus der neoklassischen Ökonomie allenfalls ein ganz spezieller Fall ist. Keynes' Mikro basiert auf verhaltensökonomischen Grundlagen, die durch die Neurowissenschaften und die Experimente der Behavioral Economics eindrucksvoll bestätigt werden.
    Date: 2018–10
  15. By: Purva Khera
    Abstract: Gender gaps in womens’ economic opportunities—labor market and entrepreneurship—have remained high in India. Lack of adequate collateral limits women entrepreneurs’ ability to access formal finance, leaving them to rely on informal sources, constraining their growth. A small-open economy DSGE model is built to investigate the long-run macroeconomic impacts from closing gender gaps in financial access. Results suggest that an increase in women entrepreneurs access to formal credit results in higher female entrepreneurship and employment, which boosts India’s output by 1.6 percent. However, regulations and gender-specific constraints in the labor market limit potential gains as females’ access to quality jobs in the formal sector remains restricted. The paper shows that the factors influencing the number of females are different from those influencing the share of females in formal economic activity. Combining gender-targeted financial inclusion policies with policies that lower constraints on formal sector employment could boost India’s output by 6.8 percent.
    Date: 2018–09–28
  16. By: Hanif Hanif (Institut Bisnis dan Informatika Kwik Kian Gie, Jl. Yos Sudarso Kav. 87, 14350, Jakarta, Indonesia Author-2-Name: Abdulah Rakhman Author-2-Workplace-Name: Institut Bisnis dan Informatika Kwik Kian Gie, Jl. Yos Sudarso Kav. 87, 14350, Jakarta, Indonesia Author-3-Name: Muhammad Nurkholis Author-3-Workplace-Name: Institut Bisnis dan Informatika Kwik Kian Gie, Jl. Yos Sudarso Kav. 87, 14350, Jakarta, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - This research aims to reveal the productivity culture existing in Rumah Makan Padang (RMP), located in Jakarta, with a view to generating a concept of productivity that is in line with RMP-based local wisdom. Methodology/Technique - An ethnographic method was employed to investigate the local perspective in the attempt to develop a new concept of productivity. Findings - The findings show that the concept of productivity existing in RMP differs from the contemporary concept of today's culture. Novelty - Whilst the conventional concept of productivity stresses on the material aspects which can be physically and financially measured with a productivity ratio of output toward input, the concept existing in RMP stresses not only on material aspects, but also spiritual aspects, to have lived in and been reflected from its uniqueness of work measurement, that is income per mato (IpM). The spiritual aspect in RMP includes a mutual belonging of the value of IDR 1, risk taking and profit sharing, proportional togetherness, spiritual leadership, hard work, bravery and willingness to sacrifice.
    Keywords: New Product development, Management, local wisdom, Indonesia.
    JEL: M11 M19
    Date: 2018–09–30
  17. By: Jonathan Appel (Tiffin University); Dohee Kim-Appel (Associate Professor)
    Abstract: A Transdisciplinary view (or ?Transdisciplinarity?) is defined as practice and research efforts conducted by academics from different disciplines working jointly to create new conceptual, theoretical, methodological, and transnational innovations that integrate and move beyond discipline-specific approaches to address complex problems. Often the traditional structure of education is the fragmenting knowledge into narrow and isolated academic disciplines. Learning is seen as a product, not a process. This more traditional view sees academics as an accumulation of objective facts, rather seeing the world as a dynamic whole composed of a myriad of interrelated phenomena. The authors call for a more connected Transdisciplinary paradigm for education, research and practice. Examples of such emergence areas of study are given and discussed.
    Keywords: Transdisciplinary, Transdisciplinarity, Multidisciplinary, Higher Education
    JEL: I21 I23
    Date: 2018–07
  18. By: Jean-Michel Salles (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: Virginie Maris, 2014 Nature à vendre-les limites des services écosystémiques, Éditions Quae, « Sciences en question », 96 p. Philosophe formée à l'Université de Montréal, Virginie Maris est chercheur CNRS dans une grande unité de recherche en écologie, le Centre d'écologie fonctionnelle et évolutive (CEFE), après un passage par le Muséum national d'Histoire naturelle (MNHN). Ce parcours atypique convient sans doute bien à une jeune chercheuse à la pensée originale sur un sujet qui a pris une importance croissante, notamment dans les champs de l'agriculture et de l'environnement. Sa thèse qui a fourni la base de sa Philosophie de la biodiversité-Petite éthique pour une nature en péril, publiée en 2010 chez Buchet-Chastel, avait déjà argumenté l'idée que le rapport de nos sociétés avec une nature vivante et fonctionnelle est mal appréhendé par un cadre de pensée utilitariste qui ne verrait dans les écosystèmes que la source de services dont la gestion impliquerait la comparaison, la mesure, voire la marchandisation. Le petit ouvrage au titre provocateur qu'elle vient de publier aux Éditions Quae à la suite des conférences données dans le cadre des rencontres « Sciences en question », lui permet de revenir sur ces thèses à partir d'une analyse critique de la notion de « services écosystémiques ». L'ouvrage est dense, bien écrit et d'une lecture très agréable. Le texte principal commence par une mise en perspective historique de la question des valeurs de la nature ; il définit ensuite la notion de service écosystémique et la questionne ; il analyse ses rapports avec la biodiversité ; puis examine les enjeux et les limites d'une quantification de la nature et de sa marchandisation, pour se conclure par un renversement de perspectives. Ce texte est précédé d'une présentation de l'auteur par Raphaël Larrère, directeur de la collection, et suivi d'une synthèse des discussions qui ont suivi les conférences. La qualité de la mise en perspective d'une question qui fait couler beaucoup d'encre, et dont la généralité se traduit trop souvent par un manque de rigueur, doit être soulignée. Virginie Maris dresse en quelques pages un tableau large et cohérent qui précise et situe un ensemble de questions qui sous-tendent des interrogations anciennes ravivées par le Millenium Ecosystem Assessment. On retrouve la nature harmonieuse chez Platon, la nature hostile après la Chute dans la pensée judéo-chrétienne qui fonderait notre volonté de domination, l'héritage moral de Darwin qui renoue la filiation des êtres vivants. Quelques paragraphes précisent les frontières entre sciences écologiques, écologie politique et éthique environnementale. On appréciera la définition claire et simple de la notion de valeur intrinsèque : « Attribuer une valeur morale à quelqu'un ou à quelque chose, c'est très exactement le reconnaître comme une fin en soi, indépendamment de l'utilité que nous pouvons en tirer. On parle alors de valeur intrinsèque ». Le texte aborde ensuite la discussion sur les limites de l'anthropocentrisme qui domine-383
    Date: 2018–07–28
  19. By: Cécile Perret (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: Ce petit manuel d'économie responsable d'un centaine de pages est volontairement publié librement. Il est constitué de 9 modules qui permettent de répondre à la question : l'économie sociale et solidaire nous permet-elle de répondre, au moins en partie, à la quadruple crise - économique, sociale, environnementale et politique - que nous traversons ? Il est illustré d'exemples, d'exercices et de travaux pratiques.Il est utilisable par les étudiants jusqu'à un niveau Master.
    Date: 2018–10–10
  20. By: Will Abel (Bank of England); Silvana Tenreyro (Bank of England; Centre for Economic Policy Research (CEPR); Centre for Macroeconomics (CFM); London School of Economics and Political Science (LSE)); Gregory Thwaites (Centre for Macroeconomics (CFM); London School of Economics and Political Science (LSE))
    Abstract: We study the evolution and effects of monopsony power in the UK private sector labour market from 1998 to 2017. Using linked employee-firm micro-data, we find that: (1) Measures of monopsony have been relatively stable across the time period examined - rising prior to the crisis, before subsequently falling again. (2) There is substantial cross-sectional variation in monopsony at the industry level. (3) Higher levels of labour market concentration are associated with lower pay amongst workers not covered by a collective bargaining agreement. (4) For workers covered by a collective bargaining agreement, the association between labour market concentration and pay is greatly reduced and in most cases disappears. (5) The link between productivity and wage levels is weaker when labour markets are more concentrated.
    Date: 2018–10

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