Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96762
Authors: 
Addison, John T.
Portugal, Pedro
Varejão, José M.
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Paper 8125
Abstract: 
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.
Subjects: 
labour demand
input heterogeneity
labour adjustment costs
wage and employment determination
product and labour market imperfections
multiple fixed effects
exogenous wages
establishment-level functions
JEL: 
J23
J3
J4
J5
D4
F66
Document Type: 
Working Paper

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