Strategic Complementarity in Labor Demand: Evidence from US Industry Leading Firms

Andrew Yizhou Liu
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Andrew Yizhou Liu: University of Arkansas

Review of Economic Dynamics, 2025, vol. 57

Abstract: This paper examines strategic complementarity in labor demand among industry-leading firms in U.S. local labor markets. Using online vacancy postings and a shift-share instrumental variable approach, I find that a 10% increase in other firms' vacancy postings reduces a firm's own postings by 5% to 8%. I identify wage adjustments and matching frictions as key channels underlying this complementarity. The findings highlight how strategic interactions among large firms shape labor market dynamics. (Copyright: Elsevier)

Keywords: Strategic complementarity; Vacancy postings; Industry leaders; Labor demand; Wage channel; Matching friction channel (search for similar items in EconPapers)
JEL-codes: J23 J64 L10 L11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.red.2025.101289

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