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Labor market power, product market power and the wage structure: a note

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  • Van Reenen, John

Abstract

A burgeoning literature in labor economics is focused on modelling employer labor market power, generally finding nontrivial estimates of monopsony power. A smaller literature also simultaneously incorporates product market power. Deb et al. (2023) is an example of applying an oligopoly-oligopsony model to the US labor market, arguing for important effects on wage levels and inequality from rising market power. I support combining IO and labor as a fruitful way of studying wages and business dynamism but argue for looking more broadly at (i) differential degrees of employer power in labor and product markets; (ii) investigating the dynamic sources of markups (e.g. through innovation) and (iii) considering wage bargaining models, not just wage posting models, which have some starkly different implications for wage setting.

Suggested Citation

  • Van Reenen, John, 2024. "Labor market power, product market power and the wage structure: a note," LSE Research Online Documents on Economics 122117, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:122117
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    File URL: https://researchonline.lse.ac.uk/id/eprint/122117/
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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