Labor Market Concentration

NBER Working Paper No. 24147

Issued in December 2017, Revised in February 2019

NBER Program(s):Industrial Organization, Labor Studies



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 CareerBuilder.com, we calculate labor market concentration for over 8,000 geographic-occupational labor markets in the US. Based on the DOJ-FTC horizontal merger guidelines, the average market is highly concentrated. Using a panel IV regression, we show that going from the 25th percentile to the 75th percentile in concentration is associated with a 17% decline in posted wages, suggesting that concentration increases labor market power.

Acknowledgments and Disclosures

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Document Object Identifier (DOI): 10.3386/w24147

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