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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

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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

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    Cited by:

    1. Gregor Jarosch & Jan Sebastian Nimczik & Isaac Sorkin, 2019. "Granular Search, Market Structure, and Wages," NBER Working Papers 26239, National Bureau of Economic Research, Inc.
    2. Roya Taherifar & Mark J. Holmes & Gazi M. Hassan, 2023. "The drivers of labour share and impact on pay inequality: A firm-level investigation," Working Papers in Economics 23/03, University of Waikato.
    3. Marinescu, Ioana & Ouss, Ivan & Pape, Louis-Daniel, 2021. "Wages, hires, and labor market concentration," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 506-605.
    4. Georg Graetz, 2019. "Labor Demand in the Past, Present, and Future," European Economy - Discussion Papers 2015 - 114, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Gregor Jarosch & Isaac Sorkin & Jan Sebastian Nimczik, 2019. "Granular Search, Concentration and Wages," 2019 Meeting Papers 1018, Society for Economic Dynamics.
    6. Matthew E. Kahn & Joseph Tracy, 2019. "Monopsony in Spatial Equilibrium," Working Papers 1912, Federal Reserve Bank of Dallas.
    7. Dominic Smith & Sergio Ocampo, 2020. "The Evolution of U.S. Retail Concentration," Economic Working Papers 526, Bureau of Labor Statistics.
    8. Yue Qiu & Aaron Sojourner, 2023. "Labor-Market Concentration and Labor Compensation," ILR Review, Cornell University, ILR School, vol. 76(3), pages 475-503, May.
    9. Graetz, Georg, 2020. "Technological change and the Swedish labor market," Working Paper Series 2020:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    10. Steven Berry & Martin Gaynor & Fiona Scott Morton, 2019. "Do Increasing Markups Matter? Lessons from Empirical Industrial Organization," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 44-68, Summer.
    11. 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.
    12. Efraim Benmelech & Nittai K. Bergman & Hyunseob Kim, 2022. "Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 200-250.
    13. Elizabeth Weber Handwerker & Matthew Dey, 2022. "Some Facts about Concentrated Labor Markets in the United States," Economic Working Papers 550, Bureau of Labor Statistics.
    14. Vitor Costa, 2023. "Local Labor Market Effects of Mergers and Acquisitions in Developing Countries: Evidence from Brazil," Papers 2306.08797, arXiv.org.
    15. Claudio Luccioletti, 2022. "Labor Market Power Across Cities," Working Papers wp2022_2214, CEMFI.
    16. Albert Jan Hummel, 2021. "Monopsony Power, Income Taxation and Welfare," CESifo Working Paper Series 9128, CESifo.
    17. Jonathan Hambur, 2023. "Did Labour Market Concentration Lower Wages Growth Pre-COVID?," RBA Research Discussion Papers rdp2023-02, Reserve Bank of Australia.
    18. Kevin Rinz, 2019. "Did Timing Matter? Life Cycle Differences in Effects of Exposure to the Great Recession," Working Papers 19-25, Center for Economic Studies, U.S. Census Bureau.
    19. Jaumandreu, Jordi & Doraszelski, Ulrich, 2019. "Using Cost Minimization to Estimate Markups," CEPR Discussion Papers 14114, C.E.P.R. Discussion Papers.
    20. Albert Jan Hummel, 2021. "Monopsony power, income taxation and welfare," Tinbergen Institute Discussion Papers 21-051/VI, Tinbergen Institute.
    21. Chen Yeh & Claudia Macaluso & Brad Hershbein, 2022. "Monopsony in the US Labor Market," American Economic Review, American Economic Association, vol. 112(7), pages 2099-2138, July.
    22. Zhuravleva, Nadezhda, 2021. "How Bad Is Labor Market Concentration?: Evidence From Soviet (Urban) Satellites," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242405, Verein für Socialpolitik / German Economic Association.
    23. Salvanes, Kjell G & Dodini, Samuel & Lovenheim, Michael F. & Willén, Alexander, 2020. "Monopsony, Skills, and Labor Market Concentration," CEPR Discussion Papers 15412, C.E.P.R. Discussion Papers.

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    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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