Monopsony Makes Firms Not Only Small but Also Unproductive: Why East Germany has Not Converged

• 成果类型: Article; Early Access
• 署名作者: Bachmann, Ruediger; Bayer, Christian; Stueber, Heiko; Wellschmied, Felix
• 署名单位: University of Michigan System; University of Michigan; Leibniz Association; Ifo Institut; University of Munich; IZA Institute Labor Economics; University of Bonn; Universidad Carlos III de Madrid
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdag033
• 发表日期: 2026
• 关键词: labor-market; INVESTMENT; unions; TRADE; price; size

摘要

When employers face a trade-off between being large and paying low wages-and in this sense have monopsony power-some productive employers decide against building large business networks, forgo sales, and remain small. These decisions have adverse consequences for aggregate labour productivity. Using high-quality administrative data from Germany, we document that East German plants (compared to West German ones) face steeper size-wage curves, invest less in their business networks, remain smaller, and are less productive. A model with labour market monopsony, product market power, and business network investments matching these features of the data predicts a 10% lower aggregate labour productivity in East Germany.