Labor Market Concentration

Citation data:

SSRN Electronic Journal

Publication Year:
2017
Usage 12393
Abstract Views 10688
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SSRN
SSRN Id:
3088767
DOI:
10.2139/ssrn.3088767
Author(s):
Joss Azar; Ioana Elena Marinescu; Marshall Steinbaum
Publisher(s):
Elsevier BV
Tags:
Monopsony; Oligopsony; Labor Markets; Competition Policy
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article description
A product market is concentrated when a few firms dominate the market. Similarly, a labor market is concentrated when a few firms dominate hiring in the market. Using data from the leading employment website CareerBuilder, we calculate labor market concentration for over 8,000 geographic-occupational labor markets in the US. Based on the DOJ-FTC horizontal merger guidelines, the average market is highly concentrated. Using a panel IV regression, we show that going from the 25th percentile to the 75th percentile in concentration is associated with a 17% decline in posted wages, suggesting that concentration increases labor market power.