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In search of labor demand

Abstract:

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 entrepreneurs...

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Publication status:
Published
Peer review status:
Peer reviewed
Version:
Accepted Manuscript

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Publisher copy:
10.1257/aer.20141374

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Institution:
University of Oxford
Division:
Social Sciences Division
Department:
Economics
Oxford college:
All Souls College
Publisher:
American Economic Association Publisher's website
Journal:
American Economic Review Journal website
Volume:
108
Issue:
9
Pages:
2714-2757
Publication date:
2018-08-31
Acceptance date:
2018-01-30
DOI:
ISSN:
0002-8282
Pubs id:
pubs:822140
URN:
uri:8ad5a06a-9279-4d47-9b9c-e9e591107007
UUID:
uuid:8ad5a06a-9279-4d47-9b9c-e9e591107007
Local pid:
pubs:822140

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