Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/196627 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12129
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
While economic studies often assume that labor markets are in equilibrium, there may be specialized labor markets that are likely in disequilibrium. We develop a new methodology to improve the estimation of a reduced form disequilibrium model from the existing models by incorporating survey-based shortage indicators into the model and estimation. Our shortage-indicator informed disequilibrium model includes as a special case the foundational model of Maddala and Nelson (1974). We demonstrate the gains in information provided by our methodology. We show how the model can be implemented by applying it to the market for anesthesiologists, a profession susceptible to disequilibrium. In this application, we find that our new disequilibrium model informed by a shortage indicator fits the data better than the Maddala-Nelson model, and has better out-of-sample predictive power.
Subjects: 
disequilibrium
labor demand
labor supply
shortage
maximum likelihood
health providers
JEL: 
J20
J44
I11
C18
Document Type: 
Working Paper

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