Does Employer Concentration Reduce Labor Force Participation?

IB#22-7

The brief’s key findings are:

  • The labor force participation of prime-age workers has been declining steadily in recent decades.
  • One reason may be the growing concentration of employers in local labor markets, which can lower wages by reducing competition for workers.
  • The analysis finds that, indeed, markets with higher employer concentration are more likely to have lower labor force participation rates.
  • The results also show that when workers have their own bargaining power through unions to counteract employer concentration, this relationship is weaker.

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