Monopsony in the UK

16 Pages Posted: 22 Oct 2018

See all articles by Will Abel

Will Abel

Bank of England - Structural Economic Analysis Division

Silvana Tenreyro

London School of Economics (LSE)

Gregory Thwaites

Bank of England - Monetary Analysis

Date Written: October 2018

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.

Keywords: labour markets, market power, monopsony, Unionization

Suggested Citation

Abel, Will and Tenreyro, Silvana and Thwaites, Gregory, Monopsony in the UK (October 2018). Available at SSRN: https://ssrn.com/abstract=3270944

Will Abel (Contact Author)

Bank of England - Structural Economic Analysis Division ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Silvana Tenreyro

London School of Economics (LSE) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Gregory Thwaites

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

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