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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 8125

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Economic Impacts of Globalization: Labor
• Subject: labour demand ; input heterogeneity ; labour adjustment costs ; wage and employment determination ; product and labour market imperfections ; multiple fixed effects ; exogenous wages ; establishment-level functions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Addison, John T. ; Portugal, Pedro ; Varejão, José M.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/96762
• Last update: 10.03.2025, 11:46 AM CET