Journal article
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 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.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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Access Document
- Files:
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(Preview, Accepted manuscript, pdf, 719.5KB, Terms of use)
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- Publisher copy:
- 10.1257/aer.20141374
Authors
- Publisher:
- American Economic Association
- Journal:
- American Economic Review More from this journal
- Volume:
- 108
- Issue:
- 9
- Pages:
- 2714-2757
- Publication date:
- 2018-08-31
- Acceptance date:
- 2018-01-30
- DOI:
- ISSN:
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0002-8282
- Pubs id:
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pubs:822140
- UUID:
-
uuid:8ad5a06a-9279-4d47-9b9c-e9e591107007
- Local pid:
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pubs:822140
- Source identifiers:
-
822140
- Deposit date:
-
2018-01-31
- ARK identifier:
Terms of use
- Copyright holder:
- American Economic Association
- Copyright date:
- 2018
- Notes:
- Copyright © 2018 AEA. This is the accepted manuscript version of the article. The final version is available online from American Economic Association at: https://doi.org/10.1257/aer.20141374
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