Local Market Power and Financial Leverage: Evidence from Online Job Postings

John (Jianqiu) Bai, Massimo Massa, Chi Wan, and Yan Wang

♦ Using online job postings from 2007 to 2021, we create a firm-level metric of local labor market concentration. Firms in more concentrated labor markets tend to have higher financial leverage. This finding is not due to correlated labor market characteristics or unobserved shocks. The positive link between labor market concentration and leverage is weaker for firms hiring in occupations with high mobility and skill transferability. To establish causality, we use Amazon HQ2’s establishment in Crystal City, Virginia, as a shock. Our results align with baseline findings and are robust to changes in local labor and economic dynamics.