Monopsony refers to a labour market with a single employer/buyer of labour being able to set the wage. While for a long time considered as a curiosity, a recent vibrant literature has demonstrated that monopsonistic markets (few buyers of labour with market power) in fact is a widespread phenomenon.

Several reasons for monopsony power: search costs, preferences for non-wage attributes, mobility costs and employers’ no-compete agreements. Many studies focus on measurement of monopsony power; the growing evidence of employers actually using it is so far mainly indirect. Studies remain largely silent on specific mechanisms behind monopsony. There is also but little evidence of which policies constrain employers from exercising their monopsony power.