Monopoly, Monopsony, and Union Strength and Local Market Wage Differentials

. The study of the influence of product market monopoly, local labor market monopsony, and union strength on market wage differentials is the purpose of this paper. Accordingly, the related theoretical propositions are examined, synthesized and extended to explain more fully observed variations in local labor market wages. In contrast to previous investigations, this study considers several varied occupations at once, encompasses nineteen different two digit SIC industries, and computes market wage data using observations on individuals from the 1970 census. The results indicate that the extent of unionism and employer monopsony contribute significantly to the explanation of market wage differentials, while the product market concentration, and its interaction with unionism does not.