Regional Variations in Labor Demand Elasticities: Evidence from U.S. Counties

Abhradeep Maiti and Debarshi Indra

MPRA Paper from University Library of Munich, Germany

Abstract: We use a large panel dataset covering the years 1988 to 2010 to estimate county specific total wage elasticities of labor demand for four highly aggregated industries in the United States. Our industries are construction, finance/real estate/service, manufacturing, and retail trade, which together employ on average over eighty percent of the U.S. national labor force per year. We use both the conventional constant coefficient panel data model and a random coefficients panel data model to estimate labor demand elasticities in various industries. We find the labor demand curves in all the industries studied to be downward sloping. We also find significant evidence that the total wage elasticity of labor demand exhibits regional variation. The labor demand estimates obtained in this study are useful to investigate the differential impact of various shocks and policy changes on the labor market. As an example, we use the estimated county specific labor demand elasticities to identify the impact of union membership and right to work laws on labor demand. We show that labor demand tends to become less elastic with higher union membership rates. We also find that labor demand becomes more elastic if a right to work law is in place.

Keywords: Labor Demand Elasticity; Random Parameter Model; Union Membership; Right to Work Law (search for similar items in EconPapers)
JEL-codes: C35 J20 J23 J50 R14 R15 R21 R41 (search for similar items in EconPapers)
Date: 2014-07-24
New Economics Papers: this item is included in nep-lab, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/57544/1/MPRA_paper_57544.pdf original version (application/pdf)

Related works:
Working Paper: Regional variations in Labor Demand Elasticities: evidence from U.S. Counties (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:pra:mprapa:57544

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().