PROJECT MANAGERs: Katrine Løken and Alexander Willen

PROJECT DURATION: 2026-2031

The dynamics of power between employers and employees have far-reaching consequences—not only for wages and employment opportunities, but for the very conditions that sustain the social fabric of society. This project develops a new framework built on the hypothesis that labor market power is a central driver of societal welfare, with effects extending well beyond wages and employment. Its findings will inform the design of more effective labor market policies aimed at improving health, reducing crime, and promoting long-term social resilience. First, the project examines how monopsonistic firms may underinvest in safe and supportive working conditions, exposing workers to risks that deteriorate their physical and mental health. Second, it investigates how monopsonistic markets may lead to underemployment and large wage markdowns, lowering the opportunity cost of crime and increasing the incentives for criminal behavior. Third, it opens the black box of firm behavior to analyze how employer power shapes internal hierarchies, organizational norms, and psychological security. Finally, it develops a theoretical framework that links firm behavior, institutional structures, and labor market power to broader societal harms. All components rely on a unique empirical infrastructure that combines rich Norwegian administrative data, novel merger and acquisition data, new workplace surveys, and quasi-experimental research designs to isolate causal effects of labor market power.

Funded by: The Research Council of Norway