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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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    1. Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Nicholas Trachter, 2021. "Diverging Trends in National and Local Concentration," NBER Macroeconomics Annual, University of Chicago Press, vol. 35(1), pages 115-150.
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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:

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    2. 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.
    3. Matthew E. Kahn & Joseph Tracy, 2019. "Monopsony in Spatial Equilibrium," Working Papers 1912, Federal Reserve Bank of Dallas.
    4. 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.
    5. Dominic Smith & Sergio Ocampo, 2020. "The Evolution of U.S. Retail Concentration," Economic Working Papers 526, Bureau of Labor Statistics.
    6. Richard S.J. Tol, 2022. "Nobel students beget Nobel professors," Tinbergen Institute Discussion Papers 22-051/V, Tinbergen Institute.
    7. 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.
    8. 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.
    9. Gregor Jarosch & Isaac Sorkin & Jan Sebastian Nimczik, 2019. "Granular Search, Concentration and Wages," 2019 Meeting Papers 1018, Society for Economic Dynamics.
    10. 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.
    11. 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.
    12. Albert Jan Hummel, 2021. "Monopsony Power, Income Taxation and Welfare," CESifo Working Paper Series 9128, CESifo.
    13. 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.
    14. Doraszelski, Ulrich & Jaumandreu, Jordi, 2019. "Using Cost Minimization to Estimate Markups," CEPR Discussion Papers 14114, C.E.P.R. Discussion Papers.
    15. 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.

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    JEL classification:

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

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