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Labor market concentration and heterogeneous effects on wages: Evidence from Japan

Author

Listed:
  • Izumi, Atsuko
  • Kodama, Naomi
  • Kwon, Hyeog Ug

Abstract

This study provides empirical evidence of the impact of labor market concentration on wages. We find that (1) wages are suppressed in more concentrated labor markets, (2) labor rigidity is associated with wage responsiveness to labor market concentration, (3) the impact of labor market concentration on wages is smaller for firms with more competitive downstream product markets, and (4) greater job opportunities outside the manufacturing sector weaken the relationship between concentration and wages. In sum, our findings indicate that labor rigidity and the degree of competition in downstream product markets, as well as outside options, affect the relationship between market concentration and wages.

Suggested Citation

  • Izumi, Atsuko & Kodama, Naomi & Kwon, Hyeog Ug, 2023. "Labor market concentration and heterogeneous effects on wages: Evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:jjieco:v:67:y:2023:i:c:s088915832200051x
    DOI: 10.1016/j.jjie.2022.101242
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    Cited by:

    1. KIKUCHI Shinnosuke, 2024. "Trends in National and Local Market Concentration in Japan: 1980-2020," Discussion papers 24049, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Concentrated labor market; Heterogenous effects; Labor share; Market power; Wage markdowns; Labor mobility;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other

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