Full Citation

Title: Bayesian Estimation of Labor Demand by Age: Theoretical Consistency and an Application to an Input-Output Model

Citation Type: Working Paper

Publication Year: 2015

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Abstract: This paper finds that a static labor demand model restricted with theoretical requirements yields empirically coherent wage elasticities of labor demand when the recent Census data are used. A Bayesian approach is used for more straightforward imposition of regularity conditions. The Bayesian model confirms elastic labor demand for youth workers, which is consistent with what past studies find. Comparison with other conventional methods suggests that monotonicity and concavity must be checked and addressed particularly in the case where one or more factor shares are so small that monotonicity is likely to be violated. Additionally, to explore the effects of changes in age structure on a regional economy, we integrate the estimated age-group-specific labor demand model into a regional input-output model. The new model suggests that ceteris paribus aging population attributes to lowering aggregate economic multipliers due to the rapidly growing number of elderly workers who earn less than younger workers.

Url: http://www.real.illinois.edu/d-paper/15/15-T-4.pdf

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Authors: Kim, Kijn; Hewings, J.D.

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Publication Number: 15-T-4

Institution: Regional Economics Applications Laboratory

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Publisher Location: University of Illinois

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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