Monopsony in Caring
Labor:
Job Search Model with Care
Kate Bahn
IAFFE Annual Conference
Berlin, July 2015
Basic Job Search Model
 Wages are determined by worker characteristics during
search and wage distribution across firms.
 Generally employed and unemployed.
 Manning (2003) back-of-the-envelope measure of labor
market frictions:
Job Search Model w/ Job and
Worker Characteristics
 Following Rosen (1974) and Lang and Majumdar
(2004)
 Type-F and Type-M workers
 Job characteristic i=0 or i=1
 Workers have preferences over job characteristics
 Job offers = compensation + utility given by job
characteristic = total utility received from a job
Caring and Non-Caring
Workers
• Preferences give by:
j = m, f
 Assume:
 The relative disamenity for jobs with caring
characteristics is lower for workers with a preference
for the characteristic.
 Utility given by:
Caring and Non-Caring Jobs
 Productivity in caring jobs:
 Productivity in non-caring jobs:
 Profit in caring firms:
 Profit in non-caring firms:
Market Structures and Outcomes
 No frictions: competitive outcome.
 Compensating wage differentials
 Salary difference given by:
 Frictions with information: both workers in both types of jobs.
 Disproportionate type-f workers in caring jobs.
 Lower pay in caring jobs because it is averaged toward lower wage offers.
 Type-F workers will even receive lower wages in the non-caring jobs.
 Frictions with no information: market will not clear.
 Offers designed for caring workers offered to non-caring workers who do
not accept.
 Employers incur a cost associated with the probability of making a job offer
that will not be accepted.
 Equilibrium exist where the market does not clear.
Next steps
 Are there equilibrium conditions that could lead to
pareto improvement of more higher paid care work and
more employed care workers?
 How to factor in how a preference for care is
disproportionately socially constructed for women
workers?
 How to relate care as a worker characteristic (a feeling)
and care as a job characteristic (an action)?
 How to account more broadly for the social value of
care above the market value in this framework?
Thank you!
Comments and feedback: [email protected]