Antitrust-Plus: Evaluating Additional Policies to Tackle Labor Monopsony

May 14, 2020

Labor market monopsony exists when firms can wield outsized power to offer lower wages. Though antitrust enforcement can address monopsony, it isn’t enough; more robust labor regulations and protections are necessary, especially in markets characterized by low concentration and little use of anticompetitive practices.

In Antitrust-Plus: Evaluating Additional Policies to Tackle Labor Monopsony, Suresh Naidu and  Eric A. Posner, law professor at the University of Chicago, catalogue and evaluate the labor interventions policymakers could pursue now, including:

  • Policies that reduce wage-setting power (e.g., antitrust or other pro-competitive policies);
  • Policies that restrain firms’ wage-setting power via wage or benefit mandates (e.g., the minimum wage, wage boards, mandated benefits, or unions); and
  • Policies that allow monopsony power to exist and be used by employers but alter the incentives facing workers or firms (e.g., earned income tax credit or wage subsidies) in order to blunt the effects.