New Measures of Labor Cost: Implications for Demand Elasticities and Nominal Wage Growth
AbstractThis study develops alternative quarterly measures of labor costs that refine the published data on hourly earnings and hourly compensation for the period 1953-1978. These new series account for deviations of hours paid for from hours worked, for the tax treatment of wages under the corporate income tax, and for variations in the user cost of training. They generally produce somewhat higher elasticities of labor demand, and explain variations in employment over time slightly better than do the published series. They also provide a different view of the recent path of wage inflation in the United States, suggesting that nominal wage growth has been more responsive to variations in the rate of price inflation than the published labor-cost series indicate. A data appendix lists the values of these new series; one series (that which adjusts for the hours paid/hours worked distinction) can be updated with readily avail- able data by persons interested in using these more appropriate measures of the cost of labor facing employers.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0821.
Date of creation: Dec 1981
Date of revision:
Publication status: published as Hamermesh, Daniel S. "New Measures of Labor Cost: Implications for Demand Elasticities and Nominal Wage Growth." The Measurement of Labor Cost, editedby Jack E. Triplett. Chicago: University of Chicago Press, (October 1983), pp. 287-305, 521-527.
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Other versions of this item:
- Daniel S. Hamermesh, 1983. "New Measures of Labor Cost: Implications for Demand Elasticities and Nominal Wage Growth," NBER Chapters, in: The Measurement of Labor Cost, pages 287-308 National Bureau of Economic Research, Inc.
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