Monopsony in Academia and the Gender Pay Gap: Evidence from California

Authors

• Zhanhan Yu, The University of Hong Kong
• Alfonso Flores-Lagunes, W.E. Upjohn Institute for Employment Research, IZA, and Global Labor OrganizationFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0001-7996-7617

Series

Upjohn Institute working paper ; 26-430

DOI

10.17848/wp26-430

Issue Date

April 2026

Abstract

We investigate monopsony power in a highly skilled labor market made up of tenure-ranked faculty in the University of California system, and analyze differential monopsony power exposure by gender. We infer the campus-level labor supply elasticity by estimating the elasticity of separations utilizing individual-level faculty data and two instruments based on campus revenues and salary scales. We find that the “exploitation rate,” a common measure of monopsony power, is about 7% for tenure-ranked faculty. There is a statistically significant difference in the monopsony power experienced by male and female faculty that appears to account for a relatively small percentage of the observed gender pay gap. We provide evidence that the gender difference in monopsony power experienced may be driven by academic fields that offer more options outside of academia.

Sponsorship

Melvin A. Eggers Fund at the Maxwell School of Citizenship and Public Affairs, Syracuse University

Subject Areas

EDUCATION; Postsecondary education; LABOR MARKET ISSUES; Wages, health insurance and other benefits; Inequality