The effects of changes in banking structure on growth and its components have been the subject of a number of studies of a cross-country nature. However, empirical studies linking banking structure to the labor market have been scanty, and the theoretical contributions have been mostly at the individual firm level. In this paper, a sample of 35 developed and emerging market nations is used to investigate the impacts on the labor market, specifically on the unemployment rate, of changes in banking sector concentration. Recognizing that country-specific labor market institutional arrangements and profiles, such as the strength of unionism and employee protection legislation can interact with the financial variables to moderate or exacerbate the impact of structural changes in the banking industry, variables representing the extent of labor market rigidity or flexibility are also included in the analysis. Results indicate that more concentrated banking market structures could have an ameliorating effect on the unemployment rate, at least in very recent periods. Labor market institutional variables capturing difficulties in hiring and firing seems to have had an opposing impact to that of banking sector concentration in the case of industrialized nations, though the variable representing trade union density was found to be insignificant.