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Monopsony in the UK

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  • Abel, Will
  • Tenreyro, Silvana
  • Thwaites, Gregory

Abstract

We study the evolution and effects of monopsony power in the UK private sector labour market from 1998 to 2017. Using linked employee-firm micro-data, we find that: (1) Measures of monopsony have been relatively stable across the time period examined - rising prior to the crisis, before subsequently falling again. (2) There is substantial cross-sectional variation in monopsony at the industry level. (3) Higher levels of labour market concentration are associated with lower pay amongst workers not covered by a collective bargaining agreement. (4) For workers covered by a collective bargaining agreement, the association between labour market concentration and pay is greatly reduced and in most cases disappears. (5) The link between productivity and wage levels is weaker when labour markets are more concentrated.

Suggested Citation

  • Abel, Will & Tenreyro, Silvana & Thwaites, Gregory, 2018. "Monopsony in the UK," LSE Research Online Documents on Economics 90871, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:90871
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    File URL: http://eprints.lse.ac.uk/90871/
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    References listed on IDEAS

    as
    1. Efraim Benmelech & Nittai K. Bergman & Hyunseob Kim, 2022. "Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 200-250.
    2. José Azar & Ioana Marinescu & Marshall Steinbaum, 2022. "Labor Market Concentration," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 167-199.
    3. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
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    1. Structure vs agency in economics
      by chris in Stumbling and Mumbling on 2019-02-21 14:15:56

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    Cited by:

    1. Marinescu, Ioana & Ouss, Ivan & Pape, Louis-Daniel, 2021. "Wages, hires, and labor market concentration," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 506-605.
    2. Bassanini, Andrea & Batut, Cyprien & Caroli, Eve, 2023. "Labor Market Concentration and Wages: Incumbents versus New Hires," Labour Economics, Elsevier, vol. 81(C).
    3. Dennery, Charles, 2020. "Monopsony with nominal rigidities: An inverted Phillips Curve," Economics Letters, Elsevier, vol. 191(C).
    4. Vlieghe, Gertjan, 2022. "Demographics and other constraints on future monetary policy," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    5. Efraim Benmelech & Nittai K. Bergman & Hyunseob Kim, 2022. "Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 200-250.
    6. Bassanini, Andrea & Batut, Cyprien & Caroli, Eve, 2021. "Labor Market Concentration and Stayers' Wages: Evidence from France," IZA Discussion Papers 14912, Institute of Labor Economics (IZA).
    7. Alan Manning, 2021. "Monopsony in Labor Markets: A Review," ILR Review, Cornell University, ILR School, vol. 74(1), pages 3-26, January.

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    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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