Wednesday, February 20, 2013

I think Don Boudreaux is confusing a shift in the MRP curve with a shift along the MC curve... his attempt to take down the monopsony view of the labor market.

I think he's right, demand for workers will be reduced by the tax he suggests, but I'm not sure what that has to do with anything.

Am I misreading this?


  1. Not sold on the monopsony argument. Competition for unskilled labor is about as strong as it gets. Every basic retail, food chain, service center,etc...all hiring low-skilled labor.

    1. I am amazed to hear so many people say this.

      This is not my recollection of teenage employment. Nobody was competing for me. I was competing for a job. It seems like the unskilled labor market is about the last labor market you'd see firms competing for workers. I think people think "lots of competition" and forget to ask themselves who is doing the competing.

      Remember, also, that unskilled workers don't have much in the way of resumes. The information a current employer has about his teenage employee is a substantial information asymmetry between employers that gives the employer a lot of market power over the employee.


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