Abstract
We analyze the effect of local-level labor market concentration on wages. Using plant-level U.S. Census data during 1978-2016, we find that: (i) local-level employer concentration exhibits substantial cross-sectional variation; (ii) consistent with labor market monopsony power, there is a negative relation between local-level employer concentration and wages that strengthens with time; (iii) instrumenting concentration with merger activity shows that increased employer concentration decreases wages; (iv) the negative relation between employer concentration and wages increases when unionization rates are low; and (v) the link between productivity growth and wage growth is stronger when labor markets are less concentrated. Our results emphasize the role oflocal labor market monopsonies in influencing firm wage-setting.
| Original language | English (US) |
|---|---|
| Pages (from-to) | S201-S250 |
| Journal | Journal of Human Resources |
| Volume | 57 |
| Issue number | SpecialIssue 1 |
| DOIs | |
| State | Published - Apr 2022 |
Funding
Conference on the Political Economy of Finance 2018 for very helpful comments. They thank Eric Kim, Honghao Wang, and Zhenzhi He for research assistance, as well as Bert Grider at the TRFSRDC and Nichole Szembrot at the NYFSRDC (Cornell) for helping with data and clearance requests. Bergman thanks the Pinhas Sapir Center for Development for financial support. All results have been reviewed by the U.S. Census Bureau to ensure that no confidential information is disclosed. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. Part of data used in this paper are drawn from the U.S. Census Bureau’s confidential databases. The underlying Census databases can be accessed by submitting a research proposal directly to the U.S. Census Bureau (https://www.census.gov/programs-surveys/ces/data/restricted-use-data/apply -for-access.html). The authors are willing to assist (Hyunseob Kim, [email protected]).
ASJC Scopus subject areas
- Economics and Econometrics
- Strategy and Management
- Organizational Behavior and Human Resource Management
- Management of Technology and Innovation
