TY  - RPRT
        AU  - Thisse, Jacques-François
AU  - Toulemonde, Eric
        TI  - The Distribution of Earnings under Monopsonistic/polistic Competition
        PY  - 2010/Aug/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5136
        UR  - https://www.iza.org/index.php/publications/dp5136
        AB  - Recent empirical contributions in labor economics suggest that individual firms face upward sloping labor supplies. We rationalize this by assuming that idiosyncratic non-pecuniary conditions interact with money wages in workers’ decisions to work for specific firms. Likewise, firms supply differentiated goods in response to differences in consumer tastes. Hence, firms are price-makers and wage-setters. By combining monopolistic and monopsonistic competition, our setting encapsulates general equilibrium interactions between the two markets. The equilibrium involves double exploitation of labor. Compared to the competitive outcome, the high-productive workers are overpaid under free entry, whereas the low-productive workers are underpaid. In the same vein, capital-owners receive a premium, whereas workers are exploited.
        KW  - wage dispersion
KW  - worker heterogeneity
KW  - monopsonistic competition
KW  - monopolistic competition
KW  - labor exploitation
        ER  -