New research from Barcelona University suggests employer market power, not just tech, drives wage inequality in America.
The Monopsony Scenario
Imagine a town with only one major employer—whether a factory, logistics hub, or call center. Working conditions may not be poor, but the firm offers little incentive for employees to excel. Without competition, workers lack alternatives. Leaving often requires changing careers or relocating.
Research Findings
For years, global wage inequality was attributed to technological progress, automation, or globalization. New research from Shubhdeepa Deby’s team at Pompeu Fabra University in Barcelona points to a more fundamental cause: the market power of firms and their dominance over local labor markets.
The study examines monopsony, a scenario where a single employer dominates hiring in a region, potentially suppressing wages and limiting worker mobility.
