Testing Theories of Job Creation: Does Supply Create Its Own Demand?

Mikael Carlsson (), Stefan Eriksson and Nils Gottfries ()

No CESifo Working Paper No. 1866, CESifo Working Paper Series from CESifo Group Munich

Abstract: Although search-matching theory has come to dominate labor economics in recent years, few attempts have been made to compare the empirical relevance of search-matching theory to efficiency wage and bargaining theories, where employment is determined by labor demand. In this paper we formulate an empirical equation for net job creation, which encompasses search-matching theory and a standard labor demand model. Estimation on firm-level data yields support for the labor demand model, wages and product demand affect job creation, but we find no evidence that unemployed workers contribute to job creation, as predicted by search-matching theory.

Keywords: job creation; involuntary unemployment; search-matching; labor demand; competitiveness (search for similar items in EconPapers)
JEL-codes: E24 J23 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Date: 2006
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Related works:
Working Paper: Testing Theories of Job Creation: Does Supply Create Its Own Demand? (2006)
Working Paper: Testing Theories of Job Creation: Does Supply Create Its Own Demand? (2006)
Working Paper: Testing Theories of Job Creation: Does Supply Create Its Own Demand? (2008)
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