Strong Employers and Weak Employees

By Efraim Benmelech, Nittai K. Bergman, Hyunseob Kim. The Journal of human resources, 2018

158 citations recorded by the source corpus.

Abstract We analyze the effect of local-level labor market concentration on wages. Using plant-level U.S. Census data during 1978–2016, we find that: (i) local-level employer concentration exhibits substantial cross-sectional variation; (ii) consistent with labor market monopsony power, there is a negative relation between local-level employer concentration and wages that strengthens with time; (iii) instrumenting concentration with merger activity shows that increased employer concentration decreases wages; (iv) the negative relation between employer concentration and wages increases when unionization rates are low; and (v) the link between productivity growth and wage growth is stronger when labor markets are less concentrated. Our results emphasize the role of local labor market monopsonies in influencing firm wage-setting.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/54da5072e0a999de6556222323d8e6579f03c0c2

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Citations in the corpus

Diverging Trends in National and Local Concentration (2018, methodology): “Figure (9) is constructed exactly as Figure (8) but uses the SIC 8 industries with increasing national trends which are not depicted in Figure (8).”
The Elusive Explanation for the Declining Labor Share (2021, methodology): “Benmelech et al. (2020) do similarly using U.S. Census data, and show that the negative correlation is stronger when unionization rates are low.”
Monopsony in Labor Markets: A Review (2020, background): “Benmelech et al. (2018) found this effect is weaker in the presence of unions.”