"This report provides an overview of labour market monopsony by delving into two of its sources which deliver unilateral firm wage setting power; namely, concentrated labour markets and the use of anticompetitive contractual instruments such as non-compete clauses. These sources limit workers' outside options and thereby increase the bargaining power of employers over workers, resulting in reduced wages and worse working conditions for the workers affected, and higher wage inequality. First, in labour markets with fewer employers and fewer outside options for workers, there is greater scope for labour market monopsony power. Indeed, based on a meta-analysis of studies on labour market concentration, a 10 per cent more concentrated labour market, meaning relatively fewer employers, is associated with a 0.2 per cent lower wage for the workers in those labour markets. Second, workers can also be affected by non-compete clauses (and other anticompetitive instruments). These are increasingly used with the seeming aim of restricting workers' outside options, resulting in lower job mobility and worse labour market outcomes. The report highlights possible ways forward, in particular by strengthening workers' bargaining power, but also by addressing labour market concentration directly, for instance through merger control and by regulating the use of non-compete clauses."

Support: Digital;Paper

ISBN (PDF) : 978-2-87452-738-8

Legal deposit : D/2024/10.574/34