In Search of Labor Demand

Paul Beaudry, David Green and Benjamin Sand ()

No 20568, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We propose and estimate a novel specification of the labor demand curve incorporating search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the employment - wage elasticity to be -1 at the industry-city level and -0.3 at the city level. We show that the difference between these estimates likely reflects the congestion externalities predicted by the search literature. Also, holding wages constant, an increase in the local population is associated with a proportional increase in employment. These results provide indirect information about the elasticity of job creation to changes in profits.

JEL-codes: J23 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-ent, nep-lab, nep-lma and nep-ure
Note: EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published as Paul Beaudry & David A. Green & Ben M. Sand, 2018. "In Search of Labor Demand," American Economic Review, vol 108(9), pages 2714-2757.

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Journal Article: In Search of Labor Demand (2018)
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