Power Dynamics in Labor Markets: Reassessing Monopsony and Policy Effectiveness in Evolving Work Structures

Abstract

The traditional view of labor markets as perfectly competitive is increasingly challenged by evidence of employer monopsony power, which can suppress wages and reduce employment. In the context of evolving work structures (e.g., gig economy, remote work) and rising political polarization, a critical reassessment of monopsony's prevalence and the effectiveness of policy interventions like minimum wages is urgently needed. This research aims to determine the extent to which monopsony power characterizes contemporary labor markets, particularly in sectors influenced by the gig economy and remote work, and how minimum wage policies and other labor regulations interact with monopsony power to affect employment, wages, and worker well-being. Empirical studies using detailed firm-level and worker-level data, comparative policy analysis, and qualitative research would be suitable. This research would contribute to labor economics by providing updated empirical evidence on monopsony power in modern labor markets and refining theoretical models of wage determination, informing policymakers on the design of effective labor market regulations.