Monopsony, Job Tasks, and Labour Market Concentration

Abstract

This paper extends the monopsony literature by taking a task-based approach and estimating the causal effect of concentration on labour market outcomes. Using detailed employer-employee data from Norway, we find that our job task-based measure shows lower degrees of concentration than conventional industry-and occupation-based measures. Exploiting mass layoffs as exogenous shocks to local labour demand, we show that workers who experience mass separations in more concentrated markets have substantially worse subsequent labour market outcomes than workers in less-concentrated markets. Our results point to the existence of employer market power that is driven by the concentration of skill demand across firms.