Product market competition and unemployment: a county-level analysis

By using a competition measure derived from the textual analysis of firms' 10-K filings, we examine the relationship between product market competition and the county-level unemployment. We find that unemployment is negatively related to product market competition pressure and the result is robust in additional tests. We also find that this relationship is strengthened in a good economy. Our findings are consistent with the previous theoretical prediction that competition can reduce unemployment. This article provides new evidence on the interactions between product markets and the labour market.