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

Axelle Arquié and Julia Bertin

Working Papers from CEPII research center

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.

Keywords: Labor Market Concentration; Inequality; Sorting (search for similar items in EconPapers)
JEL-codes: J31 J42 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-bec, nep-com, nep-lma and nep-ure
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