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Labor Market Concentration

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  • Azar, José

    (IESE Business School)

  • Marinescu, Ioana E.

    (University of Pennsylvania)

  • Steinbaum, Marshall

    (Roosevelt Institute)

Abstract

A product market is concentrated when a few firms dominate the market. Similarly, a labor market is concentrated when a few firms dominate hiring in the market. Using data from the leading employment website CareerBuilder.com, we calculate labor market concentration for over 8,000 geographic-occupational labor markets in the US. Based on the DOJ-FTC horizontal merger guidelines, the average market is highly concentrated. Using a panel IV regression, we show that going from the 25th percentile to the 75th percentile in concentration is associated with a 17% decline in posted wages, suggesting that concentration increases labor market power.

Suggested Citation

  • Azar, José & Marinescu, Ioana E. & Steinbaum, Marshall, 2017. "Labor Market Concentration," IZA Discussion Papers 11254, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11254
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    References listed on IDEAS

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    1. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
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    More about this item

    Keywords

    monopsony; oligopsony; labor markets; competition policy;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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