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Planet Money explores monopsony — when a single buyer dominates a labor market. New research suggests monopsony is far more common than economists thought and may be a key driver of wage stagnation and inequality.
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Highlights
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Monopsony is the labor market equivalent of monopoly — and it may be everywhere
When employers are the only buyer of a certain type of labor in a region, they can suppress wages below competitive levels. New research finds that monopsony power is widespread, not just in company towns.•
Non-compete agreements are a tool of monopsony power — they restrict worker mobility to keep wages low
Non-compete clauses prevent workers from taking competing jobs, effectively giving employers monopsony power even in markets with multiple employers. Banning non-competes would raise wages for 30 million American workers.Was this useful?