Research summary: Monopsony in Canadian labour markets
Official title: Market concentration in Canadian labour markets
Authors of the report: Simon Prevost
Alternate formats
Monopsony in Canadian labour markets [PDF - 280 KB]
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Why this study
This study gives an understanding of the state of labour market concentration in Canada. This in turn measures market power via the level of competition of each market. We identify the share of Canadian markets that are highly concentrated. Several studies suggest that there is a negative relationship between:
- market concentration, and
- wages
Lower wages could in turn mean an over-investment in lower-cost labour, and less of a tendency to invest in capital. This would in turn lower productivity, which is defined as the output per hour worked.
What we did
The dataset used for this study is Talent Neuron (TN) online job posting (OJP) data. The period covered is from 2019 to 2021. Markets are defined by Census Metropolitan Area (CMA) OR Census Agglomeration (CA) and by each 3-digit National Occupation Classification (NOC).
We explore levels of concentration for Canadian labour markets. This work will support further efforts to evaluate the impact of market concentration on Canadian wages.
What we found
Generally, the concentration of labour market demand appears to be quite high in Canadian labour markets. Roughly 13% of labour markets have only one firm with a job posting. Roughly 10% had only 2 firms with postings. Roughly 47% of markets are highly concentrated.
Market concentration varies by occupation. The occupations with the highest concentration include:
- natural resources
- agriculture, and
- related occupations (8)
This is expected, due to high costs of entry in industries that typically hire these workers.
The occupations with the lowest concentration include:
- business
- finance, and
- administrative occupations (1)
This is not surprising; occupations in this category tend to be highly flexible.
Population appears to have a significant impact on market concentration. Roughly 93% of monopsoniesFootnote 1 exist in Census agglomerations, the smaller of the 2 geographical region types.
What it means
This study can help explain why, for a particular occupation, wages of certain workers may be lagging those of workers elsewhere. It may also explain why workers in particular regions and associated with specific occupations are:
- unemployed
- underemployed, or
- choose to stay out of the labour market
Contact us
For access to the full report, please contact us using the email address below.
Skills and Employment Branch, Labour Market Information Directorate, Policy Research Analysis and Geomatics Division
Email: esdc.nc.sspb.research-recherche.dgpss.cn.edsc@esdc-edsc.gc.ca