Dealing with monopsony power: the case for using employment subsidies

Strobl, Eric;Walsh, Frank
(2003)

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  • Strobl, EricUCLouvain
    Author
  • Walsh, Frank
    Author
Abstract
We show in a monopsony model that a minimum wage may raise hours which are already too high but has ambiguous effects on the number of employees and utility. Employment subsidies, in contrast, unambiguously improve worker utility and bring the market equilibrium closer to the efficient outcome.
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Strobl, E., & Walsh, F. (2003). Dealing with monopsony power: the case for using employment subsidies (ECON Discussion Papers 2003/85). https://hdl.handle.net/2078.5/129057