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For this assessment task should think of as an economic policy analyst in the Commonwealth Treasury. There is increasing interest in supporting wage increases for

For this assessment task should think of as an economic policy analyst in the Commonwealth Treasury. There is increasing interest in supporting wage increases for workers, given inflation and cost of living pressures. However, there is a perennial argument that increasing wages, for example by raising minimum wages, will lead to job losses and unemployment. There is a growing understanding that this need not be the case, especially if labour markets exhibit some monopsony characteristics. task is to provide a report to team leader on monopsony in labour markets and the implications for wages policies. report must include the following sections and address the following specific questions: 1. Executive summary - summary of report. What monopsony means for the Australian labour market, workers and employers. (4 marks) The body of the report must include the following sections which should be presented with headings and any subheadings think are relevant to presentation of arguments. are encouraged to provide diagrams if they help the with argument. 2. Explain what we mean by a monopsony in a labour market. (5 marks) 3. Relative to a competitive market equilibrium, what are the impacts of monopsony in labour markets on workers and society? (5 marks) 4. Referring to evidence from relevant sources, provide examples of situations where monopsony is likely to have the greatest impact on workers and their earnings (key ideas here are industry, geographic location, firm entry and unionisation) (6 marks) 5. Provide an explanation, based on monopsony, of how introducing or increasing a minimum wage might lead to increased employment rather than increased unemployment. What are the possible benefits of the minimum wage and are there any losers? Highlight the challenges of getting such policies right and any problems or unintended consequences that may arise. (10 marks) Please also refer to the grading criteria that are available on the LMS with this assessment task. Suggested readings Some references to help you get started - you will likely need to research beyond this to establish some of the important ideas relevant to the assignment. You should review the discussion about monopsony in the text by Goolsbee, Levitt and Syverson (2020) as a starting point. Some useful references that will help you with the Australian context include: Leigh, A. (2023). How uncompetitive markets hurt workers. Australian Journal of Labour Economics, 26(1), 1-21. (discussion, not a lot of theory but valuable background) Hambur, J. (2023). Did labour market concentration lower wages growth pre-COVID?. Department of the Treasury (Australia). (more of an empirical paper, lots of data and estimation and discussion of the implications) 2 A wider ranging OECD document: Araki, S., Bassanini, A., Green, A. & Marcolin, L. (2022). Monopsony and concentration in the labour market, in OECD Employment Outlook 2022: Building Back More Inclusive Labour Markets. OECD Publishing, Paris. (This is chapter 3 of the document, it covers a wide range of information on monopsony. My suggestion is to focus on section 3.4. Monopsony and labour market policy: Direct and indirect policy considerations)

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