Working Paper: NBER ID: w28084
Authors: Ioana Marinescu; Ivan Ouss; Louis-Daniel Pape
Abstract: How does employer market power affect workers? We compute the concentration of new hires by occupation and commuting zone in France using linked employer-employee data. Using instrumental variables with worker and firm fixed effects, we find that a 10% increase in labor market concentration decreases hires by 12.4% and the wages of new hires by nearly 0.9%, as hypothesized by monopsony theory. Based on a simple merger simulation, we find that a merger between the top two employers in the retail industry would be most damaging, with about 24 million euros in annual lost wages for new hires, and an 8000 decrease in annual hires.
Keywords: Labor Market Concentration; Wages; Hires; Monopsony Theory
JEL Codes: J23; J3; J42; K21; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Horizontal Mergers (L41) | Wage Losses and Reductions in Hires (J63) |
| Labor Market Concentration (J42) | New Hires (M51) |
| Labor Market Concentration (J42) | Wages (J31) |
| Labor Market Concentration (J42) | Reduced Labor Demand (J23) |
| Union Presence + Labor Market Concentration (J49) | Wages (J31) |
| Product Market Concentration (L19) | Wages (J31) |