Department of Economics

Lund University School of Economics and Management

Departmental Seminar: Christian Bayer


Christian Bayer, University of Bonn

Christian Bayer, University of Bonn will present “Monopsony Makes Firms not only Small but also Unproductive: Why East Germany has not Converged.” (with R. Bachmann, H. Stueber and F. Wellschmied). 


Abstract; When employers face a trade-off between growing large and paying low wages--that is, when they have monopsony power--some productive employers will decide to acquire fewer customers, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity. Using high-quality administrative data from Germany, we document that East German plants (compared to West German ones) face a steeper size-wage curve, invest less into marketing, and remain smaller. A model with labor market monopsony, product market power, and customer acquisition matching these features of the data produces 10 percent lower aggregate labor productivity in East Germany.


17 February 2022


This is an online meeting.


Gunes Gokmen