Employer Concentration and Outside Options

107 Pages Posted: 15 Jun 2020 Last revised: 26 Jan 2024

See all articles by Gregor Schubert

Gregor Schubert

UCLA Anderson School of Management

Anna Stansbury

Massachusetts Institute of Technology (MIT) - Sloan School of Management; Peterson Institute for International Economics; IZA

Bledi Taska

Lightcast

Date Written: January 25, 2024

Abstract

We find that increases in employer concentration causally reduce wages, using a new instrument for employer concentration based on changes in large firms' national hiring patterns. We also show that measuring employer concentration within a single local occupation excludes important parts of workers' true labor markets. Moving from the median to the 95th percentile of employer concentration as experienced by workers causally reduces wages by 10.7 log points in low-outward-mobility occupations like registered nurses or security guards, and by 3 log points in high-outward-mobility occupations like bank tellers or counter attendants. We propose a new approach for defining mobility-adjusted labor markets, measuring employer concentration on clusters of local occupations identified through asymmetric mobility patterns (using new, highly granular data on occupational mobility from 16 million resumes). Overall, we estimate that around one in six U.S. workers face wage suppression of 2% or more as a result of employer concentration.

Keywords: monopsony, labor markets, concentration, outside options

JEL Classification: J31, J42, J62

Suggested Citation

Schubert, Gregor and Stansbury, Anna and Taska, Bledi, Employer Concentration and Outside Options (January 25, 2024). Available at SSRN: https://ssrn.com/abstract=3599454 or http://dx.doi.org/10.2139/ssrn.3599454

Gregor Schubert

UCLA Anderson School of Management ( email )

Los Angeles, CA 90095-1481
United States

HOME PAGE: http://https://www.anderson.ucla.edu/faculty-and-research/finance/faculty/gregor-schubert

Anna Stansbury (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

IZA ( email )

Bledi Taska

Lightcast ( email )

Boston, MA 02110
United States

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