From Product Concentration to Local Labor Market Outcomes: The Effect on Industry Wages

37 Pages Posted: 31 Dec 2019 Last revised: 9 Jan 2020

Date Written: July 1, 2019

Abstract

In this paper, I examine whether higher product market power can affect labor earnings through its effect on overall labor demand in distinct markets, as a set of dominant firms replaces employment by competitors. To identify relative labor demand shifts, I focus on variations in the spatial concentration within an industry following increases in market power. I find that the increase in sales and labor shares by top 4 firms cannot predict the direction of wage adjustment, but changes in spatial concentration are consistent with observed wage adjustments. Wages increase in industries where employment becomes more geographically concentrated within a set of local markets. In contrast, wages decline when rising sales and employment shares by top 4 firms reduce the geographic labor concentration.

Keywords: Labor Market Concentration, Product Market Concentration, Wages, Spatial Concentration, Market Power

JEL Classification: J23, J30, J42

Suggested Citation

Petkov, Ivan, From Product Concentration to Local Labor Market Outcomes: The Effect on Industry Wages (July 1, 2019). Available at SSRN: https://ssrn.com/abstract=3500943 or http://dx.doi.org/10.2139/ssrn.3500943

Ivan Petkov (Contact Author)

Northeastern University ( email )

220 B RP
Boston, MA 02115
United States

HOME PAGE: http://https://www.northeastern.edu/cssh/faculty/ivan-petkov

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