José A. Azar
IESE Business School, Universidad de Navarra
Avinguda Perason 21
08034 Barcelona, Spain
NBER Working Papers and Publications
|December 2017||Labor Market Concentration|
with Ioana Marinescu, Marshall I. Steinbaum: w24147
A product market is concentrated when a few firms dominate the market. Similarly, a labor market is concentrated when a few firms dominate hiring in the market. Using data from the leading employment website CareerBuilder.com, we calculate labor market concentration for over 8,000 geographic-occupational labor markets in the US. Based on the DOJ-FTC horizontal merger guidelines, the average market is highly concentrated. Using a panel IV regression, we show that going from the 25th percentile to the 75th percentile in concentration is associated with a 15-25% decline in posted wages, suggesting that concentration increases labor market power.