Competition on the labor market: the power of monopsony

Although the importance of competition in the labor market is recognized in economic theory since Adam Smith's invisible hand theory, the labor market has recently come to the attention of the competition authorities. The labor market, mostly local, is often concentrated, being oligopsony or even monopsony. This paper highlights, from a theoretical point of view, the effects of this type of non-competitive market, along with the possible risks of affecting competition on the labor market as a result of economic concentrations. The labor market should be monitored, analyzing the evolution of relevant indicators of this market, such as nominal wages and job vacancy rate, together with the estimation of concentration on local labor markets. Moreover, like the goods and services markets, the local labor market should be considered in merger operations, the lack of competition on the labor market directly impacting employees and indirectly end consumers.