Labor-Market Concentration and Labor Compensation
77 Pages Posted: 18 Jan 2019
Date Written: January 8, 2019
This paper estimates the effect of labor-market concentration on labor compensation across the U.S. private sector since 2000. We distinguish between concentration in local labor markets versus local product markets, guarding against bias from confounded product-market concentration. Analysis extends beyond wages to rates of employment-based health insurance coverage. Estimates suggest negative effects of labor-market concentration on labor compensation. This comes through both reducing the human-capital level of those in the market and reducing pay conditional on human-capital level. Higher product-market concentration exacerbates and higher unionization rates mitigates these effects.
Keywords: labor-market concentration, monopsony, wages, health insurance, unions
JEL Classification: J31, J32, J42, L13, J51
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