Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319099 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17830
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper examines the relationship between labor market power and employer discrimination, providing new causal evidence on when and where discriminatory outcomes arise. We leverage mass layoffs and firm closures as a source of exogenous job search and combine this with an exact matching approach. We compare native–immigrant worker pairs who held the same job at the same firm, in the same occupation, industry, location, and wage prior to displacement. By tracking post-displacement outcomes across labor markets with differing levels of employer concentration, we identify the causal effect of labor market power on discriminatory behavior. We provide four main findings. First, wage and employment discrimination against immigrants is substantial. Second, discrimination is amplified in concentrated labor markets and largely absent in highly competitive ones. Third, product market power has no independent effect, consistent with the idea that wage-setting power is necessary for discriminatory outcomes. Fourth, gaps fade with sustained employer–immigrant interactions, consistent with belief-based discrimination and employer learning.
Subjects: 
market power
immigration
discrimination
JEL: 
J7
J61
J42
J63
Document Type: 
Working Paper

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