Employer Concentration and Outside Options

An updated version of this working paper was uploaded on March 8, 2022.

Authors:

Gregor Schubert, Harvard University
Anna Stansbury, Harvard University
Bledi Taska, Burning Glass Technologies

Abstract:

We study the effect of within-occupation employer concentration and outside-occupation job options on wages in the US, identifying outside-occupation options using new occupational mobility data from 16 million resumes. Using shift-share instruments to identify plausibly exogenous local variation, we find that moving from the median to 95th percentile of employer concentration reduces wages by 2.6% on average and by 7.3% for workers in the lowest quartile of outward occupational mobility. We also find meaningful effects of changes in the value of outside-occupation job options on wages. Our findings imply that policymakers should take employer concentration seriously, but that measures of employer concentration – typically calculated for single occupations – should be considered alongside occupational mobility and the availability of outside-occupation options.