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Labour market concentration, wages and job security in Europe

Author

Listed:
  • Andrea Bassanini
  • Giulia Bovini
  • Eve Caroli
  • Jorge Casanova Ferrando
  • Federico Cingano
  • Paolo Falco
  • Florentino Felgueroso
  • Marcel Jansen
  • Pedro S. Martins
  • António Melo
  • Michael Oberfichtner
  • Martin Popp

Abstract

We investigate the impact of labour market concentration on two dimensions of job quality, namely wages and job security. We leverage rich administrative linked employer-employee data from Denmark, France, Germany, Italy, Portugal and Spain in the 2010s to provide the first comparable cross-country evidence in the literature. We show that the elasticities of wages with respect to labour market concentration are strikingly similar across countries. Increasing labour market concentration by 10% reduces wages by 0.19% in Germany, 0.22% in France, 0.25% in Portugal and 0.29% in Denmark. We find greater elasticities for job security. An increase in labour market concentration by 10% reduces the probability of being hired on a permanent contract by 0.46% in France, 0.51% in Germany and 2.34% in Portugal. In Italy and Spain, while not affecting this probability, labour market concentration has a strong negative effect on conversions to a permanent contract once hired on a temporary one. Using German and Portuguese data, we provide suggestive evidence that the similarity of our wage elasticities across countries and the greater sensitivity of job security to labour market concentration may be explained by the fact that sector-level collective bargaining is dominant in the countries we study and that it sets wages but usually not contract type.

Suggested Citation

  • Andrea Bassanini & Giulia Bovini & Eve Caroli & Jorge Casanova Ferrando & Federico Cingano & Paolo Falco & Florentino Felgueroso & Marcel Jansen & Pedro S. Martins & António Melo & Michael Oberfichtne, 2023. "Labour market concentration, wages and job security in Europe," Nova SBE Working Paper Series wp654, Universidade Nova de Lisboa, Nova School of Business and Economics.
  • Handle: RePEc:unl:unlfep:wp654
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    References listed on IDEAS

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    1. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
    2. repec:iab:iabfda:201801(en is not listed on IDEAS
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    Cited by:

    1. Samuel Dodini & Kjell Salvanes & Alexander L.P. Willén & Kjell G. Salvanes, 2021. "The Dynamics of Power in Labor Markets: Monopolistic Unions versus Monopsonistic Employers," CESifo Working Paper Series 9495, CESifo.
    2. Dodini, Samuel & Løken, Katrine & Willén, Alexander, 2022. "The Effect of Labor Market Competition on Firms, Workers, and Communities," Discussion Paper Series in Economics 17/2022, Norwegian School of Economics, Department of Economics.
    3. Bassanini, Andrea & Batut, Cyprien & Caroli, Eve, 2023. "Labor Market Concentration and Wages: Incumbents versus New Hires," Labour Economics, Elsevier, vol. 81(C).
    4. Bustos, Emil, 2023. "The Effect of Centrally Bargained Wages on Firm Growth," Working Paper Series 1456, Research Institute of Industrial Economics.
    5. Chen, Yunsi & Hu, Dezhuang, 2023. "Why are exporters more gender-friendly? Evidence from China," Economic Modelling, Elsevier, vol. 118(C).
    6. Abi Adams-Prassl & Tom Waters & Maria Balgova & Matthias Qian, 2023. "Firm concentration & job design: the case of schedule flexible work arrangements," IFS Working Papers W23/14, Institute for Fiscal Studies.

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    More about this item

    Keywords

    Labour market concentration; Monopsony; Wages; Job security; Collective bargaining;
    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
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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