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Labor Market Concentration and Wages: Incumbents versus New Hires

Author

Listed:
  • Andrea Bassanini

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Cyprien Batut

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Eve Caroli

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, Legos - Laboratoire d'Economie et de Gestion des Organisations de Santé - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We investigate the impact of labor market concentration on average wages and decompose it into its effects on new hires and incumbents, where incumbents are defined as individuals who were already employed in the same firm the year before. Using administrative data for France, we find that concentration negatively affects both new hires' and incumbents' wages with elasticities ranging from -0.0287 to -0.0296 and -0.0185 to -0.0230, respectively. It also reduces the probability that a worker be a new hire rather than an incumbent. When decomposing the overall effect of labor market concentration on wages into its different components, we find that the negative effect on incumbents' wages accounts for between two thirds and three fourth of the total.

Suggested Citation

  • Andrea Bassanini & Cyprien Batut & Eve Caroli, 2023. "Labor Market Concentration and Wages: Incumbents versus New Hires," Post-Print hal-04002685, HAL.
    • Handle: RePEc:hal:journl:hal-04002685
    DOI: 10.1016/j.labeco.2023.102338
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    References listed on IDEAS

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    Cited by:

    1. Julian Alves & Jason Greenberg & Yaxin Guo & Ravija Harjai & Bruno Serra & John Van Reenen, 2024. "Labour market power: New evidence on Non-Compete Agreements and the effects of M&A in the UK," CEP Discussion Papers dp1976, Centre for Economic Performance, LSE.
    2. Vitor Costa, 2023. "Local Labor Market Effects of Mergers and Acquisitions in Developing Countries: Evidence from Brazil," Papers 2306.08797, arXiv.org.
    3. Martins, Pedro S. & Melo, António, 2024. "Making their own weather? Estimating employer labour-market power and its wage effects," Journal of Urban Economics, Elsevier, vol. 139(C).

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    More about this item

    Keywords

    Labor market concentration; Monopsony; Wages; Incumbents;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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