The Own-Wage Elasticity of Labor Demand: A Meta-Regression Analysis

By Andreas Lichter, Andreas Peichl, Sebastian Siegloch. Social Science Research Network, 2014

166 citations recorded by the source corpus.

The own-wage elasticity of labor demand is a key parameter in empirical research and policy analysis. However, despite extensive research, estimates of labor demand elasticities are subject to considerable heterogeneity. In this paper, we explore various dimensions of this heterogeneity by means of a comprehensive meta-regression analysis, building on information from 151 different studies containing 1334 estimates in total. Our results show that heterogeneity in the estimates of the elasticity is natural to a considerable extent: the magnitude of the elasticity depends on the theoretical model applied and features of the workforce. Moreover, we find that labor demand has become more elastic over time, and is particularly elastic in countries with low levels of employment protection legislation. Furthermore, we find heterogeneity due to the empirical specification of the labor demand model, characteristics of the dataset and publication bias.

Subfields: Economics and Econometrics, Gender Studies

View Paper: https://www.semanticscholar.org/paper/e3b9acdad31dc064e05613f511b26e58cf4a4968

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Citations in the corpus

Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment (2017, background): “13 ), which is well within the range of existing estimates ranging from 0.15 to 0.75 (e.g., Hamermesh 1993; Lichter, Peichl, and Siegloch 2015).”
The Effectiveness of Hiring Credits (2019, background): “Accordingly, at the end of 2009, the monthly cost of creating one job amounts to around 700 euros.37 36Empirical evidence shows that the labor demand for low-skilled workers is more elastic (Hamermesh (2013), Lichter, Peichl, and Siegloch (2015)).”
Disappearing Routine Jobs: Who, How, and Why? (2017, methodology): “In considering different values of the own elasticities, we refer to the empirical work of Lichter, Peichl, and Siegloch (2015) who conduct a meta analysis of 151 different studies containing 1334 estimate of the own-wage elasticity of labor demand.”