Monopsonistic Behavior in Chilean Manufacturing

David Mackinson; Lucas Navarro

doi:10.4067/S0718-88702013000200004

Authors

David Mackinson Chimera Research Group
Lucas Navarro ILADES-Universidad Alberto Hurtado

DOI:

https://doi.org/10.4067/S0718-88702013000200004

Keywords:

Monopsony, labor markets, Chile

Abstract

This paper uses a firm-specific method for measuring monopsonistic behavior developed by Brummund (2012) using data for Chilean manufacturing plants for the period 2001-2006. We find that there is significant heterogeneity in labor market power across plants and that nearly a quarter of the plants have a significant level of labor market power. It is also shown that individual plant characteristics explain more of the variation in monopsonistic behavior than do the characteristics of the accompanying labor market. These results are relevant for labor market policy since and suggest that a binding minimum wage could have ambiguous effects on welfare.

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