NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?

Efraim Benmelech, Nittai Bergman, Hyunseob Kim

NBER Working Paper No. 24307
Issued in February 2018
NBER Program(s):Corporate Finance, Economic Fluctuations and Growth, Labor Studies, Productivity, Innovation, and Entrepreneurship

We analyze the effect of local-level labor market concentration on wages. Using Census data over the period 1977–2009, we find that: (1) local-level employer concentration exhibits substantial cross-sectional and time-series variation and increases over time; (2) consistent with labor market monopsony power, there is a negative relation between local-level employer concentration and wages that is more pronounced at high levels of concentration and increases over time; (3) the negative relation between labor market concentration and wages is stronger when unionization rates are low; (4) the link between productivity growth and wage growth is stronger when labor markets are less concentrated; and (5) exposure to greater import competition from China (the “China Shock”) is associated with more concentrated labor markets. These five results emphasize the role of local-level labor market monopsonies in influencing firm wage-setting behavior and can potentially explain some of the stagnation of wages in the United States over the past several decades.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

A non-technical summary of this paper is available in the May 2018 NBER digest.  You can sign up to receive the NBER Digest by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w24307

Users who downloaded this paper also downloaded* these:
Eggertsson, Robbins, and Wold w24287 Kaldor and Piketty’s Facts: The Rise of Monopoly Power in the United States
Azar, Marinescu, and Steinbaum w24147 Labor Market Concentration
Stansbury and Summers w24165 Productivity and Pay: Is the link broken?
Hoynes and Rothstein w22080 Tax Policy Toward Low-Income Families
Kleven, Landais, and Egholt Søgaard w24219 Children and Gender Inequality: Evidence from Denmark
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us