ABSTRACT
This chapter describes the new monopsony and its implications for employment law. A monopsonistic labour market inefficiently employs too few workers and pays them below their marginal product. Traditionally, monopsony is a single isolated employer, but this does not describe modern, urban labour markets. Labour economists have recently shown that many employers face upward-sloping supply curves even when surrounded by competing employers because job search and mobility is costly. An upward-sloping supply curve, rather than single employer, is monopsony’s essence. ‘Sticky workers’ is a better moniker than ‘monopsony’ of this common problem. Some policies (eg licensing requirements, noncompete agreements, and training-repayment agreements) exacerbate the sticky-worker problem. Other policies (eg minimum wage laws, antitrust law, and government job centres) combat worker stickiness. But just as unequal bargaining power can be overused, monopsony power (even in its modern form of upward-sloping supply curves and sticky workers) does not justify all employment regulation.
Schwab, Stewart Jon, Monopsony, Sticky Workers, and Bargaining Power (August 21, 2024), Cornell Legal Studies Research Paper; Oxford Handbook of the Law of Work (Guy Davidov, Brian Langille and Gillian LL Lester eds), 2024, 143-156.
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