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Monopsony power and wages: Evidence from the introduction of serfdom in Denmark

Gary, Kathryn LU ; Sandholt Jensen, Peter ; Olsson, Mats LU ; Radu, Cristina Victoria ; Severgnini, Battista and Sharp, Paul (2022) In Economic Journal 132(648). p.2835-2872
Abstract
We exploit a large historical shock to the Danish labour market to provide evidence of how restrictions on labour mobility increase monopsony power and thereby reduce wages. By severely limiting the possibility of the rural population to work beyond their place of birth, the reintroduction of serfdom in 1733 aimed to increase monopsony power and secure cheaper labour in the countryside. Using a unique data source based on the archives of estates from the eighteenth century, we test whether serfdom affected the wages of farmhands more strongly than other groups in the labour market, and results based on a difference-in-differences approach reveal evidence consistent with a strong negative effect following its introduction. This is confirmed... (More)
We exploit a large historical shock to the Danish labour market to provide evidence of how restrictions on labour mobility increase monopsony power and thereby reduce wages. By severely limiting the possibility of the rural population to work beyond their place of birth, the reintroduction of serfdom in 1733 aimed to increase monopsony power and secure cheaper labour in the countryside. Using a unique data source based on the archives of estates from the eighteenth century, we test whether serfdom affected the wages of farmhands more strongly than other groups in the labour market, and results based on a difference-in-differences approach reveal evidence consistent with a strong negative effect following its introduction. This is confirmed when we use a different control group from the Swedish province of Scania. We also investigate whether one mechanism was that boys with rural backgrounds were prevented from taking up apprenticeships in towns and find suggestive evidence that this was indeed the case. (Less)
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author
; ; ; ; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Wage Level and Structure, Wage Differentials, Monopsony, Segmented Labor Markets, Europe: Pre-1913, Other Economic Systems
in
Economic Journal
volume
132
issue
648
pages
2835 - 2872
publisher
Wiley-Blackwell
external identifiers
  • scopus:85145302937
ISSN
1468-0297
DOI
10.1093/ej/ueac037
language
English
LU publication?
yes
id
f6ec5083-9705-4052-81e4-37e5b4c2908f
date added to LUP
2022-04-06 13:09:55
date last changed
2023-01-16 16:48:58
@article{f6ec5083-9705-4052-81e4-37e5b4c2908f,
  abstract     = {{We exploit a large historical shock to the Danish labour market to provide evidence of how restrictions on labour mobility increase monopsony power and thereby reduce wages. By severely limiting the possibility of the rural population to work beyond their place of birth, the reintroduction of serfdom in 1733 aimed to increase monopsony power and secure cheaper labour in the countryside. Using a unique data source based on the archives of estates from the eighteenth century, we test whether serfdom affected the wages of farmhands more strongly than other groups in the labour market, and results based on a difference-in-differences approach reveal evidence consistent with a strong negative effect following its introduction. This is confirmed when we use a different control group from the Swedish province of Scania. We also investigate whether one mechanism was that boys with rural backgrounds were prevented from taking up apprenticeships in towns and find suggestive evidence that this was indeed the case.}},
  author       = {{Gary, Kathryn and Sandholt Jensen, Peter and Olsson, Mats and Radu, Cristina Victoria and Severgnini, Battista and Sharp, Paul}},
  issn         = {{1468-0297}},
  keywords     = {{Wage Level and Structure; Wage Differentials; Monopsony; Segmented Labor Markets; Europe: Pre-1913; Other Economic Systems}},
  language     = {{eng}},
  month        = {{07}},
  number       = {{648}},
  pages        = {{2835--2872}},
  publisher    = {{Wiley-Blackwell}},
  series       = {{Economic Journal}},
  title        = {{Monopsony power and wages: Evidence from the introduction of serfdom in Denmark}},
  url          = {{http://dx.doi.org/10.1093/ej/ueac037}},
  doi          = {{10.1093/ej/ueac037}},
  volume       = {{132}},
  year         = {{2022}},
}