NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

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):The Corporate Finance Program, The Economic Fluctuations and Growth Program, The Labor Studies Program, The Productivity, Innovation, and Entrepreneurship Program

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.

download in pdf format
   (903 K)

email paper

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