Impact of Market Concentration on Employment and Wages: a Look at the Insurance Industry

The falling share of labor in national income is a global concern. This study examined the impact of changes in market concentration ratios in the insurance industry on employment, the share of wages, sales (premiums), and annual wages. Panel data were analyzed for the period 2001 to 2012 for the li...

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Bibliographic Details
Published in:Atlantic economic journal 2019-06, Vol.47 (2), p.169-178
Main Authors: Sharma, Ghanshyam, Rotthoff, Kurt W.
Format: Article
Language:English
Subjects:
Averages
Companies
Concentration ratios
Economic analysis
Economic models
Economic performance
Economics
Economics and Finance
Employment
Financial analysis
Health care industry
Health insurance
Insurance industry
International Economics
Labor
Life insurance
Macroeconomics/Monetary Economics//Financial Economics
Market concentration
Microeconomics
National income
Panel data
Premiums
Property
Property & casualty insurance
Public Finance
Sales
Statistics
Wages & salaries
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Summary:The falling share of labor in national income is a global concern. This study examined the impact of changes in market concentration ratios in the insurance industry on employment, the share of wages, sales (premiums), and annual wages. Panel data were analyzed for the period 2001 to 2012 for the life, property, and health insurance industries, available from the Bureau of Economic Analysis, Bureau of Labor Statistics, and SNL Financial Analysis database. Using a fixed effects model, we found that higher market concentration was associated with lower employment in the industry and a lower share of wages. However, there was no statistically significant association between concentration and average annual wage. Moreover, there was evidence that market concentration is positively associated with higher total sales (premiums received by the companies). Thus, we conclude that lower employment is not driven by the poor economic performance of the industry.
ISSN:0197-4254
1573-9678
DOI:10.1007/s11293-019-09621-w