Market Concentration and Labour Market Outcomes

Abstract

The evaluation and legislation regarding market concentration has long been centred on consumer welfare. The impacts of decreased competition on labour market outcomes have only recently begun to receive attention. Using data from the U.S. Economic Census (ECN), years 2002, 2007, and 2012, I examine the impact of market concentration, using the Herfindahl–Hirschman Index, on three sets of outcome variables, labour bill per worker, aggregate labour bill, and share of total expenses going to labour, each with three increasingly narrow specifications of overall costs of labour, payroll costs of labour, and production workers wages. Using OLS regression, my models find a small, statistically, but not economically, significant, correlation between concentration and labour expenses at the per worker level, but large negative correlation at the aggregate level.