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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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    File URL: https://ideas.repec.org/jmp/2018/pli1202.pdf
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    References listed on IDEAS

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    1. David Autor & David Dorn & Lawrence F. Katz & Christina Patterson & John Van Reenen, 2017. "The Fall of the Labor Share and the Rise of Superstar Firms," CEP Discussion Papers dp1482, Centre for Economic Performance, LSE.
    2. Cecile Gaubert, 2018. "Firm Sorting and Agglomeration," NBER Working Papers 24478, National Bureau of Economic Research, Inc.
    3. José A. Azar & Ioana Marinescu & Marshall I. Steinbaum & Bledi Taska, 2018. "Concentration in US Labor Markets: Evidence From Online Vacancy Data," NBER Working Papers 24395, National Bureau of Economic Research, Inc.
    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. Keith Barnatchez & Leland Crane & Ryan Decker, 2017. "An Assessment of the National Establishment Time Series (NETS) Database," Finance and Economics Discussion Series 2017-110, Board of Governors of the Federal Reserve System (U.S.).
    6. Efraim Benmelech & Nittai K. Bergman & Hyunseob Kim, 2018. "Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?," Working Papers 18-15, Center for Economic Studies, U.S. Census Bureau.
    7. Dale T. Mortensen, 2005. "Wage Dispersion: Why Are Similar Workers Paid Differently?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633191, December.
    8. Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Nicholas Trachter, 2020. "Diverging Trends in National and Local Concentration," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, National Bureau of Economic Research, Inc.
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    12. 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.
    13. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
    14. Matthias Kehrig & Nicolas Vincent, 2018. "The Micro-Level Anatomy of the Labor Share Decline," NBER Working Papers 25275, National Bureau of Economic Research, Inc.
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    16. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March.
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    Full references (including those not matched with items on IDEAS)

    Citations

    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

    Citations

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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. 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.
    3. Gregor Jarosch & Isaac Sorkin & Jan Sebastian Nimczik, 2019. "Granular Search, Concentration and Wages," 2019 Meeting Papers 1018, Society for Economic Dynamics.
    4. Matthew E. Kahn & Joseph Tracy, 2019. "Monopsony in Spatial Equilibrium," Working Papers 1912, Federal Reserve Bank of Dallas.
    5. 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.
    6. 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.
    7. Doraszelski, Ulrich & Jaumandreu, Jordi, 2019. "Using Cost Minimization to Estimate Markups," CEPR Discussion Papers 14114, C.E.P.R. Discussion Papers.
    8. Georg Graetz, 2020. "Labor Demand in the Past, Present and Future," CESifo Working Paper Series 8234, CESifo.
    9. Graetz, Georg, 2020. "Labor Demand in the Past, Present, and Future," IZA Discussion Papers 13142, Institute of Labor Economics (IZA).

    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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