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The Heterogenous Effects of Employers’ Concentration on Wages: Better Sorting or Uneven Rent Extracting?

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  • Axelle Arquié
  • Julia Bertin

Abstract

Are workers equal in front of employers' concentration? We show, using instrumental variable estimations for France between 2000 and 2019, that employers' concentration has a negative heterogenous effect on wage, with the lowest earners being the most vulnerable. This increased wage inequality could reflect some efficiency gains if concentration allows employers to impose a more demanding selection process, improving sorting i.e. workers selection, thus generating both inequality and higher productivity. We find, exploring within-firm and between-firm inequality, that it is not the case. Employers' concentration instead generates wage inequality by undercutting relatively more the bargaining power of the lowest earners.

Suggested Citation

  • Axelle Arquié & Julia Bertin, 2022. "The Heterogenous Effects of Employers’ Concentration on Wages: Better Sorting or Uneven Rent Extracting?," Working Papers 2022-09, CEPII research center.
    • Handle: RePEc:cii:cepidt:2022-09
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    References listed on IDEAS

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    1. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
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    6. Jae Song & David J Price & Fatih Guvenen & Nicholas Bloom & Till von Wachter, 2019. "Firming Up Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 1-50.
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    More about this item

    Keywords

    Labor Market Concentration; Inequality; Sorting;
    All these keywords.

    JEL classification:

    • 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

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