Labor Market Concentration

A product market is concentrated when a few firms dominate the market. Similarly, a labor market is concentrated when a few firms dominate hiring in the market. Using data from the leading employment website CareerBuildercom, we calculate labor market concentration for more than 8,000 geographic-occupational labor markets in the United States. Based on the Department of Justice-Federal Trade Commission horizontal merger guidelines, the average market is highly concentrated. Going from the 25th percentile to the 75th percentile in concentration is associated with a 5 percent (OLS) to 17 percent (IV) decline in posted wages, suggesting that concentration increases labor market power.

Automated summary

A labor market is considered concentrated when a few firms dominate hiring, similar to a concentrated product market. Analysis of data from CareerBuilder.com shows that the majority of labor markets in the United States are highly concentrated. The study also finds that higher concentration leads to a decrease in posted wages, indicating an increase in labor market power.