Volume 14, Number 4 (Fall) 1979
Hamermesh, Daniel S., and James Grant. 1979. "Econometric Studies of Labor-Labor Substitution and Their Implications for Policy." Journal of Human Resources 14(4):518-542.
A critical synthesis of the rapidly growing literature on substitution among labor force aggregates is presented. Despite the large number of studies now available, the only firm conclusions are: (1) Physical and human capital are complements and are jointly substitutable with raw labor. This has implications for policies that subsidize the wage costs of low-wage workers. (2) Young workers' own-wage elasticity of demand exceeds unity, but the degree to which they are substitutes for older workers is unclear. The paper suggests that future research should concentrate on substitution among workers disaggregated by age, education, or sex rather than by the blue-collar - white-collar distinction used in most work and that has little use in policy analysis.
The authors are, respectively, Professor of Economics, Michigan State University, and Assistant Professor of Economics, Wellesley College. Helpful comments were provided by Richard Anderson, Gilbert Ghez, George Johnson, Michael Sattinger, and a referee. We are especially indebted to Ernst Berndt and Richard Freeman for their numerous insightful comments on a previous draft.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X