Monopsony Power and Inequality

ABSTRACT:

The purpose of this project is to collect evidence on the sources of monopsony power and to characterize their role in wage and working conditions inequality. It will develop on a large body of empirical literature, but go beyond it as the focus will be on estimating the elasticity of labour supply along both the hiring and the separation margins, and by socio-economic group. Particular attention will be devoted to the incidence over the entire skill distribution of anticompetitive arrangements, such as “no-compete” clauses introduced in individual labour contracts to restrict mobility of workers as well as “no-poaching” agreements subscribed by collusive employers. The emphasis put in this project on these anticompetitive practices is justified by the fact that these contractual sources of monopsony power, unlike other potential determinants such as labour market frictions and workers preferences (e.g., distaste for commuting), when properly detected can be removed by appropriate policy intervention. The project will also characterise heterogeneity among socio-economic groups of the willingness to quit a low-paid job. The scope and effects on quits of non-compete agreements will be assessed through ad-hoc online surveys in different EU countries (France, Germany, Italy and Spain). The implications of our findings will be used to provide an overall assessment of the role played by monopsony power in inequality.

Other Research Units: 

• Paolo Naticchioni, Università degli Studi Roma Tre