Premium
REGIONAL VARIATIONS IN LABOR DEMAND ELASTICITY: EVIDENCE FROM U.S. COUNTIES
Author(s) -
Maiti Abhradeep,
Indra Debarshi
Publication year - 2016
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/jors.12265
Subject(s) - economics , elasticity (physics) , wage , real estate , panel data , amenity , price elasticity of demand , labor demand , econometrics , urbanization , labour economics , microeconomics , materials science , finance , composite material , economic growth
ABSTRACT We use a large panel dataset covering the period 1988–2010 to estimate county specific own‐wage elasticity of labor demand in the U.S. for four highly aggregated industries: construction, finance/insurance/real‐estate/service, manufacturing, and retail trade. Our estimation of a random parameter panel data model yields significant evidence of spatial variations in wage elasticity of labor demand. We relate the spatial variation in elasticity to differences in county characteristics like industry specialization, industry competition, levels of natural amenity and urbanization. Using a regression discontinuity approach we also find that probusiness states have higher labor demand elasticity.