New Market Power Models and Sex Differences in Pay

In the context of certain models, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. We use this strategy to estimate the elasticity of labor supply for men and women workers at a chain of grocery stores, identifying separation elasticities from differences in wages and separation rates across different job titles within the firm. We estimate that women have lower elasticities, so a Robinson-style monopsony model can explain reasonably well the lower relative pay of women in the retail grocery industry. (c) 2010 by The University of Chicago.