Volume 11, Number 4 (Fall) 1976
Hamermesh, Daniel S. 1976. "Econometric Studies of Labor Demand and Their Application to Policy Analysis." Journal of Human Resources 11(4):507-525.
This study surveys time-series studies of the short-run demand for labor in the United States. The elasticity of labor demand in response to a change in wages, holding output and price of capital constant, is similar in a large number of studies; the likeliest short-run (one-year) elasticity is -.15. The elasticity with respect to a change in output, holding factor prices constant, is .75 after one year, with an even stronger agreement among the studies surveyed. These estimates are used to illustrate, for four policies equivalent to subsidies or taxes on wages, how their short-run impacts on employment can be evaluated.
The author is Professor of Economics, Michigan State University. Most of this study was done while the author was Director, Office of Research-ASPER, U.S. Department of Labor.
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