Monopsony trends

Recently, the Biden administration’s Treasury Department highlighted concerns that monopsony power is hurting workers. In particular, the department underscored the role that competitive labor markets play in fostering “the economic freedom to switch jobs or negotiate a higher wage.”

But how much market power do US employers have? 

In a paper in the American Economic Review, authors Chen YehClaudia Macaluso, and Brad Hershbein estimated markdowns in the US manufacturing sector and found that most manufacturing plants do in fact operate in a monopsonistic environment.


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