Monopsony in the UK

a column by Will Abel, Silvana Tenreyro and Gregory Thwaites for VOX: CEPR’s Policy Portal

Concentrated labour markets, in which workers have few choices of potential employers, reduce the wages of workers when they are not covered by collective wage bargaining agreements.

But these types of agreements have become much less common in the past 20 years.

This column uses employee-level data to show that even though UK labour markets have not on average become much more concentrated, concentration – which varies a great deal across regions and industries – is having a bigger impact on wages than before.

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