Labor Market Power: From Micro Evidence to Macro Consequences

Berger, Herkenhoff, and Mongey review the evidence that employers possess wage-setting power and argue that firm size and strategic interaction must be included in any serious account of monopsony. Local concentration measures alone can miss large employers that influence wages across markets.

Their macro framework connects employer power to lower wages, employment, and output, and to the design of minimum wages, collective bargaining, and antitrust policy. The article is useful because it translates scattered micro evidence into economy-wide consequences.