Common Ownership and Wages *

Abstract

Using administrative data from the U.S. Census Bureau, this paper provides the first evidence on the effect of common ownership on employee wages. Using firms' additions to the S&P 500 index as a shock to their local competitors' common ownership, we find that, after a firm enters the S&P 500 index, the average employee wages of S&P 500 incumbents in the same local labor market decrease. Additionally, these firms' employment increases. These two findings are inconsistent with the canonical monopsony and oligopsony models but our generalized model of oligopsony incorporating a recruitment intensity margin can rationalize them.

Keywords: Monopsony, Oligopsony, Labor Markets, Competition Policy, Common Ownership

JEL Classification: J42, J31, L40, D40, G34