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

April 2018

Working Paper Number:

CES-18-15

Abstract

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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Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

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:
market, payroll, industrial, employ, employed, labor productivity, labor, heterogeneity, economically, wage regressions, worker, wages productivity, regressing, effect wages, industry wages, wage growth, wages production, wage differences, labor statistics, labor markets, union, trends labor

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:
Census of Manufactures, Annual Survey of Manufactures, Standard Industrial Classification, Bureau of Labor Statistics, Labor Productivity, Current Population Survey, Longitudinal Business Database, Census Industry Code, Department of Justice, Census of Manufacturing Firms, North American Industry Classification System, Herfindahl Hirschman Index

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