Labour Demand Research: Towards a Better Match between Better Theory and Better Data

John Addison, Pedro Portugal () and Jose Varejao ()

No 8125, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: At first blush, most advances in labour demand were achieved by the late 1980s. Since then progress might appear to have stalled. We argue to the contrary that significant progress has been made in understanding labour market frictions and imperfections, and in modelling search behaviour and heterogeneous preferences. Perhaps most notable have been the improvements in data, in the form of longitudinal matched employer-employee data, and in techniques and algorithms (e.g. for solving heterogeneous parameter models). In short, the Cinderella status of the field is frankly overdrawn. Nevertheless, a chief lacuna remains the need for a better match between theory and data. This paper provides a critical albeit eclectic assessment of these developments, along the dimensions of the static and dynamic theory of labour demand, wage formation, and estimation, noting advances and limitations. As is conventional, somewhat greater emphasis is placed on the latter.

Keywords: multiple fixed effects; product and labour market imperfections; wage and employment determination; labour adjustment costs; input heterogeneity; labour demand; exogenous wages; establishment-level functions (search for similar items in EconPapers)
JEL-codes: D4 F66 J23 J3 J4 J5 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2014-04
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published - published in: Labour Economics, 2014, 30, 4-11

Downloads: (external link)
https://docs.iza.org/dp8125.pdf (application/pdf)

Related works:
Journal Article: Labor demand research: Toward a better match between better theory and better data (2014)
Working Paper: Labour Demand Research: Towards a Better Match between Better Theory and Better Data (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp8125

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().