Labor Market Concentration

33 Pages Posted: 19 Dec 2017 Last revised: 28 Dec 2017

José Azar

University of Navarra, IESE Business School

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice; National Bureau of Economic Research (NBER)

Marshall Steinbaum

Roosevelt Institute

Multiple version iconThere are 3 versions of this paper

Date Written: December 15, 2017

Abstract

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.

Keywords: Monopsony, Oligopsony, Labor Markets, Competition Policy

JEL Classification: J42, L13, L4

Suggested Citation

Azar, José and Marinescu, Ioana Elena and Steinbaum, Marshall, Labor Market Concentration (December 15, 2017). Available at SSRN: https://ssrn.com/abstract=3088767 or http://dx.doi.org/10.2139/ssrn.3088767

José Azar (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice ( email )

3701 Locust Walk
Philadelphia, PA 19104-6214
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Marshall Steinbaum

Roosevelt Institute ( email )

1789 Lanier Pl. NW Apt. 1
Washington, DC 20009
United States

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