Labor Market Concentration
41 Pages Posted: 19 Dec 2017 Last revised: 7 Feb 2019
Date Written: December 10, 2018
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: Suggested Citation