Labor Market Concentration, Earnings Inequality, and Earnings Mobility
September 2018
Working Paper Number:
carra-2018-10
Abstract
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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:
payroll,
earnings,
employ,
employed,
labor,
recession,
industry employment,
heterogeneity,
metropolitan,
workforce,
salary,
industry concentration,
occupation,
workers earnings,
measures employment,
employment measures,
worker demographics,
earner,
earnings inequality,
earnings growth,
employment distribution,
earnings mobility
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Internal Revenue Service,
Social Security Administration,
Census Bureau Longitudinal Business Database,
Current Population Survey,
Longitudinal Business Database,
Employer Identification Numbers,
Social Security,
Economic Census,
Council of Economic Advisers,
North American Industry Classification System,
American Community Survey,
Business Register,
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W-2,
Herfindahl Hirschman Index,
Social and Economic Supplement,
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