Holdup in oligopsonistic labour markets
Subtitle: a new role for the minimum wage
By: by Leo Kaas, Paul Madden
Contributors: Madden, Paul
Series: Discussion paper -- no. 2043; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2043
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] :
Subjects: Minimum wage; Labor market
Description: "We consider a labour market model of oligopsonistic wage competition and show that there is a holdup problem although workers do not have any bargaining power. When a firm invests more, it pays a higher wage in order to attract workers from competitors. Because workers participate in the returns on investment while only firms bear the costs, investment is inefficiently low. A binding minimum wage can achieve the first--best level of investment, both in the short run for a given number of firms and in the long run when the number of firms is endogenous"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 3/28/2006.

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