In search of labor demand
We propose and estimate a novel specification of labor demand which encompasses search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the wage elasticity of employment demand to be close to -1 at the industry-city level and...
| Main Authors: | , , |
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| Format: | Journal article |
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American Economic Association
2018
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| _version_ | 1826283809438433280 |
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| author | Beaudry, P Green, D Sand, B |
| author_facet | Beaudry, P Green, D Sand, B |
| author_sort | Beaudry, P |
| collection | OXFORD |
| description | We propose and estimate a novel specification of labor demand which encompasses search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the wage elasticity of employment demand to be close to -1 at the industry-city level and -0.3 at the city level. We argue that the difference between these estimates reflects the congestion externalities predicted by the search literature. Our estimates also indicate that entrepreneurship should be treated as a scarce factor in the determination of labor demand. We use our estimates to evaluate the impact of large changes in the minimum wage on employment. |
| first_indexed | 2024-03-07T01:04:26Z |
| format | Journal article |
| id | oxford-uuid:8ad5a06a-9279-4d47-9b9c-e9e591107007 |
| institution | University of Oxford |
| last_indexed | 2024-03-07T01:04:26Z |
| publishDate | 2018 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | oxford-uuid:8ad5a06a-9279-4d47-9b9c-e9e5911070072022-03-26T22:34:11ZIn search of labor demandJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:8ad5a06a-9279-4d47-9b9c-e9e591107007Symplectic Elements at OxfordAmerican Economic Association2018Beaudry, PGreen, DSand, BWe propose and estimate a novel specification of labor demand which encompasses search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the wage elasticity of employment demand to be close to -1 at the industry-city level and -0.3 at the city level. We argue that the difference between these estimates reflects the congestion externalities predicted by the search literature. Our estimates also indicate that entrepreneurship should be treated as a scarce factor in the determination of labor demand. We use our estimates to evaluate the impact of large changes in the minimum wage on employment. |
| spellingShingle | Beaudry, P Green, D Sand, B In search of labor demand |
| title | In search of labor demand |
| title_full | In search of labor demand |
| title_fullStr | In search of labor demand |
| title_full_unstemmed | In search of labor demand |
| title_short | In search of labor demand |
| title_sort | in search of labor demand |
| work_keys_str_mv | AT beaudryp insearchoflabordemand AT greend insearchoflabordemand AT sandb insearchoflabordemand |