Description:
This study provides empirical evidence on the impact of labor market concentration on wages, introducing novel instruments that potentially affect plants’ entry/exit decision but not wages directly. We find that (1) wages are suppressed in more concentrated labor markets; (2) higher mobility across plants is associated with greater wage responsiveness to labor market concentration, (3) greater job opportunities outside the manufacturing sector weaken the relationship between concentration and wages, and (4) the impact of labor market concentration on wages is smaller for firms with more competitive downstream product markets. In sum, our findings indicate workers’ bargaining power as well as the degree of competition in downstream product markets affect the relationship between market concentration and markdowns