Labor Demand on a Tight Leash
Fuente:
arXiv
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| Auteurs principaux: | , |
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| Format: | Preprint |
| Publié: |
2022
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| _version_ | 1866908947953221632 |
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| author | Bossler, Mario Popp, Martin |
| author_facet | Bossler, Mario Popp, Martin |
| contents | We develop a labor demand model that encompasses pre-match hiring cost arising from tight labor markets. Through the lens of the model, we study the effect of labor market tightness on firms' labor demand by applying novel shift-share instruments to the universe of German firms. In line with theory, we find that a doubling in tightness reduces firms' employment by 5 percent. Taking into account the resulting search externalities, the wage elasticity of firms' labor demand reduces from -0.7 to -0.5 through reallocation effects. In light of our results, pre-match hiring cost amount to 40 percent of annual wage payments. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2203_05593 |
| institution | arXiv |
| publishDate | 2022 |
| record_format | arxiv |
| spellingShingle | Labor Demand on a Tight Leash Bossler, Mario Popp, Martin General Economics Economics We develop a labor demand model that encompasses pre-match hiring cost arising from tight labor markets. Through the lens of the model, we study the effect of labor market tightness on firms' labor demand by applying novel shift-share instruments to the universe of German firms. In line with theory, we find that a doubling in tightness reduces firms' employment by 5 percent. Taking into account the resulting search externalities, the wage elasticity of firms' labor demand reduces from -0.7 to -0.5 through reallocation effects. In light of our results, pre-match hiring cost amount to 40 percent of annual wage payments. |
| title | Labor Demand on a Tight Leash |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2203.05593 |