Wages, Hires, and Labor Market Concentration

69 Pages Posted: 1 Oct 2019

See all articles by Ioana Elena Marinescu

Ioana Elena Marinescu

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

Ivan Ouss

University of Paris-Saclay - Ecole Polytechnique

Louis-Daniel Pape

CREST - Institut Polytechnique de Paris; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Date Written: September 14, 2019

Abstract

How does employer market power affect workers? We compute the concentration of new hires by occupation and commuting zone in France using linked employer-employee data. Using instrumental variables with worker and firm fixed effects, we find that a 10% increase in labor market concentration decreases hires by 12.4% and the wages of new hires by nearly 0.9%, as hypothesized by monopsony theory. Based on a simple merger simulation, we find that a merger between the top two employers in the retail industry would be most damaging, with about 24 million euros in annual lost wages for new hires, and an 8000 decrease in annual hires.

Keywords: Labor Market Concentration, Wages, Hires, Merger Simulation

JEL Classification: J31, J32, J42, L13, J51, L40, L41, L44

Suggested Citation

Marinescu, Ioana Elena and Ouss, Ivan and Pape, Louis-Daniel, Wages, Hires, and Labor Market Concentration (September 14, 2019). Available at SSRN: https://ssrn.com/abstract=3453855 or http://dx.doi.org/10.2139/ssrn.3453855

Ioana Elena Marinescu (Contact Author)

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

Ivan Ouss

University of Paris-Saclay - Ecole Polytechnique ( email )

55 Avenue de Paris
Versailles, 78000
France

Louis-Daniel Pape

CREST - Institut Polytechnique de Paris ( email )

Route de Saclay
Palaiseau, 91120
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

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