Testing Theories of Job Creation: Does Supply Create its Own Demand?

By Mikael Carlsson, Stefan Eriksson, Nils Gottfries. Social Science Research Network, 2006

130 citations recorded by the source corpus.

Although search-matching theory has come to dominate labor economics in recent years, few attempts have been made to compare the empirical relevance of search-matching theory to efficiency wage and bargaining theories, where employment is determined by labor demand. In this paper we formulate an empirical equation for net job creation, which encompasses search-matching theory and a standard labor demand model. Estimation on firm-level data yields support for the labor demand model, wages and product demand affect job creation, but we find no evidence that unemployed workers contribute to job creation, as predicted by search-matching theory.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/8b8bb48669f842e38f0987552cf61cc6d4ae8a64

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In Economics and Econometrics

1. Magnus Gustavsson
2. Henrik Jordahl
3. Niclas Berggren

Citations in the corpus

• Inequality and trust in Sweden : Some inequalities are more harmful than others (2008, methodology): “Sweden’s 13 main trading partners; see Carlsson et al. (2006) for further details on how (2) is constructed.”