Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/93299 
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers No. 7958
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Firms' labor demand responses to wage changes are of key interest in empirical research and policy analysis. However, despite extensive research, estimates of labor demand elasticities remain subject to considerable heterogeneity. In this paper, we conduct a comprehensive meta-regression analysis to re-assess the empirical literature on labor demand elasticities. Building on 942 elasticity estimates from 105 different studies, we identify sources of variation in the absolute value of this elasticity. Heterogeneity due to the theoretical and empirical specification of the labor demand model, different datasets used or sectors and countries considered explains more than 80% of the variation in the estimates. We further find substantial evidence for the presence of publication selection bias, as estimates of the own-wage elasticity of labor demand are upwardly inflated.
Subjects: 
labor demand
wage elasticity
meta-analysis
JEL: 
J23
C10
C83
Document Type: 
Working Paper

Files in This Item:
File
Size
467.18 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.