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![]() ![]() Kate Bahn, the director of labor market policy and chief economist at the Washington Center for Equitable Growth, defined monopsony in a briefing to congressional staffers last month: “Monopsony can be narrowly defined as any time there is one or few employers hiring workers, so they have considerable power to keep wages low since those workers do not have a lot of other options for jobs.”īut monopsony power, Bahn noted, is present not just when there are only a few employers in a particular labor market. In recent years, rising interest in the causes, consequences, and policy implications of imperfect competition has sparked a new wave of research on a framework known in economics as monopsony. In the case of the market for labor-a market that, it is worth noting, is fundamentally different from those where financial products or commodities are bought and sold-imperfect competition means that workers’ pay is solely determined neither by their productivity nor by the forces of supply and demand. Contrary to what many of us were taught in Introduction to Economics courses in college and graduate school, markets are rarely perfectly competitive.
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