Antitrust Remedies for Labor Market Power

In a new paper, written with Suresh Naidu and Glen Weyl, I explore ways that antitrust law can be used to counter labor market power. Is labor market power a serious problem? Increasingly, the answer seems to be yes. The latest research suggest residual labor market elasticities in many markets in the neighborhood of 0.5 to 3. The figure above, taken from our paper, provides a rough estimate of the cost to efficiency (DWL = deadweight loss) and workers (“labor share”).  Yes, there are assumptions galore, but you’ll need to read the paper if you want to know what they are. You can find it here.

In another (short) paper, Alan Kreuger and I argue for limits on covenants-not-to-compete and no-poaching agreements, among other things, as a way of curbing monopsony power targeted at low-income workers. Here’s the paper, and here’s an op-ed.