DP18101 Local and National Concentration Trends in Jobs and Sales: The Role of Structural Transformation
National industrial concentration in the U.S. has risen sharply since the early 1980s, but there
remains dispute over whether local geographic concentration has followed a similar trend. Using
near population data from the Economic Censuses, we confirm and extend existing evidence
on national U.S. industrial concentration while providing novel evidence on local concentration.
We document that the Herfindhahl index of local employment concentration, measured
at the county-by-NAICS six-digit-industry cell level, fell between 1992 and 2017 even as local
sales concentration rose. The divergence between national and local employment concentration
trends is attributable to the structural transformation of U.S. economic activity: both
sales and employment concentration rose within industry-by-county cells; but reallocation of
sales and employment from relatively concentrated Manufacturing industries (e.g., steel mills)
towards relatively un-concentrated Service industries (e.g. hair salons) reduced local concentration.
A stronger between-sector shift in employment relative to sales drove the net fall in local
employment concentration. Holding industry employment shares at their 1992 level, average
local employment concentration would have risen by about 9% by 2017. Instead, it fell by 5%.
Falling local employment concentration may intensify competition for recent market entrants.
Simultaneously, rising within industry-by-geography concentration may weaken competition for
incumbent workers who have limited sectoral mobility. To facilitate analysis, we have made
data on these trends available at concentration trends.