Market Structure and Worker Quality

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It is frequently asserted, although never directly tested, that firms in more monopolistic industries hire better qualified workers. This paper presents two new results. First, worker quality (education in particular) is a strong determinant of whether a worker is employed in a concentrated industry when using a traditional data source. Second, upon expanding the data to include measures of research and development, workers of better quality are actually no more likely to locate in concentrated industries. These results fit with theories claiming that industries subject to technological opportunities may be more concentrated and that those opportunities demand higher quality workers.