Wages, Hires, and Labor Market Concentration

70 Pages Posted: 16 Nov 2020 Last revised: 26 Sep 2022

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

Télécom Paris

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Date Written: November 2020

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.

Suggested Citation

Marinescu, Ioana Elena and Ouss, Ivan and Pape, Louis-Daniel, Wages, Hires, and Labor Market Concentration (November 2020). NBER Working Paper No. w28084, Available at SSRN: https://ssrn.com/abstract=3731253

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

Télécom Paris ( email )

19, Place Marguerite Perey
Palaiseau, 91120
France

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