Labor-Market Concentration and Labor Compensation

Abstract

This paper estimates the effect of labor-market concentration on labor compensation across
the U.S. private sector since 2000. We distinguish between concentration in local labor markets
versus local product markets, guarding against bias from confounded product-market concentration. Analysis extends beyond wages to rates of employment-based health insurance coverage. Estimates suggest negative effects of labor-market concentration on labor compensation. These effects are exacerbated when product-market concentration is higher or when workers are older.

Keywords: labor-market concentration, wages, health insurance, unions

JEL Classification: J31, J32, J42, L13, J51