Wages, hires, and labor market concentration


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, we find that a 10% increase in labor market concentration decreases hires by 3.2% and their hourly wage by nearly 0.5%, 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 30 million euros in annual loss to the wage bill of new hires, and a 3000 decrease in annual hires.

Journal of Economic Behavior & Organization