Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition

@article{Bhaskar1996MinimumWF,
  title={Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition},
  author={V. Bhaskar and Ted To},
  journal={Labor and Demography},
  year={1996}
}
Recent empirical work on the effects of minimum wages has called into question the conventional wisdom that minimum wages invariably reduce employment. We develop a model of \emph{monopsonistic competition} with \emph{free entry} to analyze the effects of minimum wages, and our predictions fit the empirical results closely. Under monopsonistic competition, we find that a rise in the minimum wage a) raises employment per firm, b) causes firm exit, c) may increase or reduce industry employment… Expand

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Comment on 'Minimum Wages for Ronald Mcdonald Monopsonies: A Theory of Monopsonistic Competition'
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