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Labor Market Concentration does not Explain the Falling Labor Share

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  • Ben Lipsius

Abstract

Using U.S. administrative data, this paper shows that the employment-weighted average labor market concentration has been declining since 1980 - the opposite of the change needed to explain the falling labor share. The relationship between wages and labor market concentration has also weakened (become less negative) over that time. Together, these results make labor market concentration an implausible driver of the falling labor share despite a strong, negative relationship between labor market concentration and wages.

Suggested Citation

  • Ben Lipsius, 2018. "Labor Market Concentration does not Explain the Falling Labor Share," 2018 Papers pli1202, Job Market Papers.
  • Handle: RePEc:jmp:jm2018:pli1202
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    References listed on IDEAS

    as
    1. Rossi-Hansberg, Esteban & Sarte, Pierre-Daniel G. & Trachter, Nicholas, 2018. "Diverging Trends in National and Local Concentration," Working Paper 18-15, Federal Reserve Bank of Richmond.
    2. Jan De Loecker & Jan Eeckhout, 2017. "The Rise of Market Power and the Macroeconomic Implications," NBER Working Papers 23687, National Bureau of Economic Research, Inc.
    3. Azar, José & Marinescu, Ioana E. & Steinbaum, Marshall & Taska, Bledi, 2018. "Concentration in US Labor Markets: Evidence from Online Vacancy Data," IZA Discussion Papers 11379, Institute for the Study of Labor (IZA).
    4. Alan Manning & Barbara Petrongolo, 2017. "How Local Are Labor Markets? Evidence from a Spatial Job Search Model," American Economic Review, American Economic Association, vol. 107(10), pages 2877-2907, October.
    5. Partridge, Mark D. & Rickman, Dan S. & Olfert, M. Rose & Ali, Kamar, 2012. "Dwindling U.S. internal migration: Evidence of spatial equilibrium or structural shifts in local labor markets?," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 375-388.
    6. repec:aea:aecrev:v:108:y:2018:i:11:p:3117-53 is not listed on IDEAS
    7. José Azar & Ioana Marinescu & Marshall I. Steinbaum, 2017. "Labor Market Concentration," NBER Working Papers 24147, National Bureau of Economic Research, Inc.
    8. Nicolas Vincent & Matthias Kehrig, 2017. "Growing Productivity without Growing Wages: The Micro-Level Anatomy of the Aggregate Labor Share Decline," 2017 Meeting Papers 739, Society for Economic Dynamics.
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    12. Raven Molloy & Christopher L. Smith & Abigail Wozniak, 2013. "Declining Migration wihin the US: The Role of the Labor Market," Working Papers 13-53, Center for Economic Studies, U.S. Census Bureau.
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    14. Gaubert, Cécile, 2018. "Firm Sorting and Agglomeration," CEPR Discussion Papers 12835, C.E.P.R. Discussion Papers.
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    16. Dale T. Mortensen, 2005. "Wage Dispersion: Why Are Similar Workers Paid Differently?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633191, January.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why Local Labor Market Concentration Is Lower Than It Used to Be, Even As National Concentration Increases
      by Kevin Rinz in Pro-Market on 2019-01-02 13:35:10

    More about this item

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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