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Strategic Complementarity in Labor Demand: Evidence from US Industry Leading Firms

Author

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  • Andrew Yizhou Liu

    (University of Arkansas)

Abstract

This paper examines strategic complementarity in labor demand among industry-leading firms in U.S. local labor markets. Using online vacancy postings and a shift-share instrumental variable approach, I find that a 10% increase in other firms' vacancy postings reduces a firm's own postings by 5% to 8%. I identify wage adjustments and matching frictions as key channels underlying this complementarity. The findings highlight how strategic interactions among large firms shape labor market dynamics. (Copyright: Elsevier)

Suggested Citation

  • Andrew Yizhou Liu, 2025. "Strategic Complementarity in Labor Demand: Evidence from US Industry Leading Firms," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 57, July.
    • Handle: RePEc:red:issued:24-209
    DOI: 10.1016/j.red.2025.101289
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    More about this item

    Keywords

    Strategic complementarity; Vacancy postings; Industry leaders; Labor demand; Wage channel; Matching friction channel;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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