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Employer Concentration and Labor Force Participation

March 2022

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The 10 most similar working papers to the working paper 'Employer Concentration and Labor Force Participation' are listed below in order of similarity.

• Working Paper

  
  
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  September 2018

  Authors: Kevin Rinz

  Working Paper Number:

  carra-2018-10

  Using data from the Longitudinal Business Database and Form W-2, I document trends in local industrial concentration from 1976 through 2015 and estimate the effects of that concentration on earnings outcomes within and across demographic groups. Local industrial concentration has generally been declining throughout its distribution over that period, unlike national industrial concentration, which declined sharply in the early 1980s before increasing steadily to nearly its original level beginning around 1990. Estimates indicate that increased local concentration reduces earnings and increases inequality, but observed changes in concentration have been in the opposite direction, and the magnitude of these effects has been modest relative to broader trends; back-of-the-envelope calculations suggest that the 90/10 earnings ratio was about six percent lower and earnings were about one percent higher in 2015 than they would have been if local concentration were at its 1976 level. Within demographic subgroups, most experience mean earnings reductions and all experience increases in inequality. Estimates of the effects of concentration on earnings mobility are sensitive to specification.
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• Working Paper

  
  
  County-Level Estimates of the Employment Prospects of Low-Skill Workers
  

  July 2000

  Authors: David C Ribar

  Working Paper Number:

  CES-00-11

  This study examines low-skill wage and employment opportunities for men and women at the county level over the period 1989-96. Currently, reliable direct measures of wages and employment rates for different demographic and skill groups are only available for large geographic areas such as regions and populous states or at infrequent intervals (e.g., from the Decennial Census) for some smaller areas. This study constructs indirect annual measures for all counties from 1989-96 by combining skill-specific information on earnings and employment from the Sample Edited Detail File (SEDF) of the 1990 Decennial Census and the 1990-97 Annual Demographic files of the Current Population Survey (CPS) with annual industry-specific information from the Regional Economic Information System (REIS). Special versions of the SEDF and CPS files that identify county of residence are used. The study regresses the low-skill wage and employment data from the SEDF and CPS files on a set of personal variables from the combined files and local employment measures derived from the REIS. The wage regressions are corrected for selectivity from the employment decision and account for county-specific effects as well as general time effects. Estimates from the regressions are then combined with the available employment data from the REIS to impute wage and employment rates for low-skill adults across counties.
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• Working Paper

  
  
  Employer Dominance and Worker Earnings in Finance
  

  August 2024

  Authors: Wenting Ma

  Working Paper Number:

  CES-24-41

  Large firms in the U.S. financial system achieve substantial economic gains. Their dominance sets them apart while also raising concerns about the suppression of worker earnings. Utilizing administrative data, this study reveals that the largest financial firms pay workers an average of 30.2% more than their smallest counterparts, significantly exceeding the 7.9% disparity in nonfinance sectors. This positive size-earnings relationship is consistently more pronounced in finance, even during the 2008 crisis or compared to the hightech sector. Evidence suggests that large financial firms' excessive gains, coupled with their workers' sought-after skills, explain this distinct relationship.
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• Working Paper

  
  
  Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?
  

  April 2018

  Authors: Hyunseob Kim, Efraim Benmelech, Nittai K. Bergman

  Working Paper Number:

  CES-18-15

  We analyze the effect of local-level labor market concentration on wages. Using plant-level U.S. Census data over the period 1977'2009, we find that: (1) local-level employer concentration exhibits substantial cross-sectional and time-series variation and increases over time; (2) consistent with labor market monopsony power, there is a negative relation between local-level employer concentration and wages that is more pronounced at high levels of concentration and increases over time; (3) the negative relation between labor market concentration and wages is stronger when unionization rates are low; (4) the link between productivity growth and wage growth is stronger when labor markets are less concentrated; and (5) exposure to greater import competition from China (the 'China Shock') is associated with more concentrated labor markets. These five results emphasize the role of local-level labor market monopsonies in influencing firm wage-setting.
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• Working Paper

  
  
  Declining Migration wihin the US: The Role of the Labor Market
  

  October 2013

  Authors: Raven Molloy, Christopher L. Smith, Abigail Wozniak

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  Interstate migration has decreased steadily since the 1980s. We show that this trend is not related to demographic and socioeconomic factors, but that it appears to be connected to a concurrent secular decline in labor market transitions'i.e. the fraction of workers changing employer, industry or occupation. We explore a number of reasons for the dual trends in geographic and labor market transitions, including changes in the distribution of job opportunities across space, polarization in the labor market, concerns of dual-career households, and changes in the net benefit to changing employers. We find little empirical support for all but the last of these hypotheses. Specifically, using data from three cohorts of the National Longitudinal Surveys spanning the 1970s to the 2000s, we find that wage gains associated with employer transitions have fallen, while the returns to staying with the same employer have not changed. We favor the interpretation that, at least from the 1990s to the 2000s, the distribution of outside offers has shifted in a way that has made labor market transitions, and thus geographic transitions, less desirable to workers.
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• Working Paper

  
  
  Shareholder Power and the Decline of Labor
  

  May 2022

  Authors: Till von Wachter, Hyunseob Kim, Antonio Falato

  Working Paper Number:

  CES-22-17

  Shareholder power in the US grew over recent decades due to a steep rise in concentrated institutional ownership. Using establishment-level data from the US Census Bureau's Longitudinal Business Database for 1982-2015, this paper examines the impact of increases in concentrated institutional ownership on employment, wages, shareholder returns, and labor productivity. Consistent with theory of the firm based on conflicts of interests between shareholders and stakeholders, we find that establishments of firms that experience an increase in ownership by larger and more concentrated institutional shareholders have lower employment and wages. This result holds in both panel regressions with establishment fixed effects and a difference-in-differences design that exploits large increases in concentrated institutional ownership, and is robust to controls for industry and local shocks. The result is more pronounced in industries where labor is relatively less unionized, in more monopsonistic local labor markets, and for dedicated and activist institutional shareholders. The labor losses are accompanied by higher shareholder returns but no improvements in labor productivity, suggesting that shareholder power mainly reallocates rents away from workers. Our results imply that the rise in concentrated institutional ownership could explain about a quarter of the secular decline in the aggregate labor share.
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• Working Paper

  
  
  Employee Capitalism or Corporate Socialism? Broad-Based Employee Stock Ownership
  

  December 2009

  Authors: E. Han Kim, Paige Ouimet

  Working Paper Number:

  CES-09-44

  How employee share ownership plans (ESOPs) affect employee compensation and shareholder value depends on the size. Small ESOPs, defined as those controlling less than 5% of outstanding shares, benefit both workers and shareholders, implying positive productivity gains. However, the effects of large ESOPs on worker compensation and shareholder value are more or less neutral, suggesting little productivity gains. These differential effects appear to be due to two non-value-creating motives specific to large ESOPS: (1) To form management-worker alliances ala Pagano and Volpin (2005), wherein management bribes workers to garner worker support in thwarting hostile takeover threats and (2) To substitute wages with ESOP shares by cash constrained firms. Worker compensation increases when firms under takeover threats adopt large ESOPs, but only if the firm operates in a non-competitive industry. The effects on firm valuation also depend on the strength of product market competition: When the competition is strong (weak), most of the productivity gains accrue to employees (shareholders). Competitive industry also implies greater job mobility within the industry, enabling workers to take a greater portion of productivity gains.
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• Working Paper

  
  
  How Do Health Insurance Costs Affect Firm Labor Composition and Technology Investment?
  

  September 2023

  Authors: Shan He, Cristina Tello-Trillo, Janet Gao, Lawrence D. W. Schmidt

  Working Paper Number:

  CES-23-47

  Employer-sponsored health insurance is a significant component of labor costs. We examine the causal effect of health insurance premiums on firms' employment, both in terms of quantity and composition, and their technology investment decisions. To address endogeneity concerns, we instrument for insurance premiums using idiosyncratic variation in insurers' recent losses, which is plausibly exogenous to their customers who are employers. Using Census microdata, we show that following an increase in premiums, firms reduce employment. Relative to higher-income coworkers, lower-income workers see a larger increase in their likelihood of being separated from their jobs and becoming unemployed. Firms also invest more in information technology, potentially to substitute labor.
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• Working Paper

  
  
  Firms and Layoffs: The Impact of Unionization on Involuntary Job Loss
  

  March 2003

  Authors: Vanessa V Tinsley

  Working Paper Number:

  CES-03-09

  This paper focuses on the impact of unionization on involuntary job loss using establishment data from the 1997 National Employer Survey (NES-II) and merging those data with contextual data at the industry level as well as with local labor market data. The estimated logit models included information on unionization rates and employment security provisions present in collective bargaining agreements as factors influencing layoff rates for individual establishments, controlling for establishment size, firm structure, use of non-regular employees, product/service demand and local employment. Results show that the impact of unionization is not significant except for (1) establishments that operate in the non-manufacturing sector; and (2) establishments operating in industries that have major collective bargaining agreements which contain moderate employment security provisions. Under those conditions, unionization decreases layoff rates; otherwise, unionization has no effect on layoff rates. These results provide some evidence that unions may have placed increased emphasis on employment security in order to protect members against involuntary job loss. This is in contrast to earlier studies which found a positive relationship between unionization and layoffs. In addition, establishments in Right-to-Work states have higher rates of involuntary job loss.
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• Working Paper

  
  
  Labor Market Networks and Recovery from Mass Layoffs Before, During, and After the Great Recession
  

  June 2015

  Authors: Judith Hellerstein, David Neumark, Mark J. Kutzbach

  Working Paper Number:

  CES-15-14

  We test the effects of labor market networks defined by residential neighborhoods on re-employment following mass layoffs. We develop two measures of labor market network strength. One captures the flows of information to job seekers about the availability of job vacancies at employers of workers in the network, and the other captures referrals provided to employers by other network members. These network measures are linked to more rapid re-employment following mass layoffs, and to re-employment at neighbors' employers. We also find evidence that network connections ' especially those that provide information about job vacancies ' became less productive during the Great Recession.
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