TY - CHAP

T1 - Monopoly’s neglected twin?

T2 - The effect of labour market concentration on wages and inequality

AU - Koelle, Michael

AU - Scholl, Nathan

AU - Schwellnus, Cyrille

AU - Bertheau, Antoine

PY - 2021

Y1 - 2021

N2 - High labour market concentration (i.e. the concentration of employment or hiring in a small number of firms) may allow employers to suppress wages. This chapter uses linked employer-employee data from seven OECD countries to analyse the extent of labour market concentration across countries, industries, geographical areas and groups of workers, as well as its effects on wages. The main findings are: (1) a significant share of workers (around 20%) are employed in highly-concentrated labour markets, especially in manufacturing and rural areas; (2) high labour market concentration reduces wages; (3) negative wage effects tend to be particularly pronounced for low-qualified workers; and (4) over the past two decades, negative wage effects have become stronger at any given level of concentration, but concentration itself has remained broadly flat. These results imply that labour market concentration is a relevant issue from the perspective of public policies aiming to address inequality but cannot explain broader economic trends related to wage stagnation and the decline in the labour income share experienced by a number of countries over the past two decades.

AB - High labour market concentration (i.e. the concentration of employment or hiring in a small number of firms) may allow employers to suppress wages. This chapter uses linked employer-employee data from seven OECD countries to analyse the extent of labour market concentration across countries, industries, geographical areas and groups of workers, as well as its effects on wages. The main findings are: (1) a significant share of workers (around 20%) are employed in highly-concentrated labour markets, especially in manufacturing and rural areas; (2) high labour market concentration reduces wages; (3) negative wage effects tend to be particularly pronounced for low-qualified workers; and (4) over the past two decades, negative wage effects have become stronger at any given level of concentration, but concentration itself has remained broadly flat. These results imply that labour market concentration is a relevant issue from the perspective of public policies aiming to address inequality but cannot explain broader economic trends related to wage stagnation and the decline in the labour income share experienced by a number of countries over the past two decades.

U2 - 10.1787/fd80057f-en

DO - 10.1787/fd80057f-en

M3 - Book chapter

BT - The Role of Firms in Wage Inequality

PB - OECD Publishing

ER -