ABSTRACT
As the introductory quote from Richard Freeman and James Medoff suggests, they did think that unions had “monopoly” power. The monopsony model can be usefully extended to the macro arena to explain the puzzles that became evident as unions declined. These puzzles were not foreseen in Freeman and Medoff as a consequence of de-unionization, since they did not explore monopsony or macro. Freeman and Medoff did not devote much attention to the macro side of unions, perhaps because they believed that union erosion made the old concerns about wage-push irrelevant. There was a significant body of opinion in the 1930s and before that saw the alternative to the union monopoly face featured in Freeman and Medoff not as textbook competition but as monopsony. In turn, some who held that opinion saw monopsony as affecting macro performance adversely and therefore looked to unions as a corrective force.
