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Do labor costs affect companies' demand for labor?

Author

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  • Daniel S. Hamermesh

    (University of Texas at Austin, USA)

Abstract

Higher labor costs (higher wage rates and employee benefits) make workers better off, but they can reduce companies' profits, the number of jobs, and the hours each person works. Overtime pay, hiring subsidies, the minimum wage, and payroll taxes are just a few of the policies that affect labor costs. Policies that increase labor costs can substantially affect both employment and hours, in individual companies as well as the overall economy.

Suggested Citation

  • Daniel S. Hamermesh, 2014. "Do labor costs affect companies' demand for labor?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-3, May.
  • Handle: RePEc:iza:izawol:journl:y:2014:n:3
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    References listed on IDEAS

    as
    1. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, January.
    2. Daron Acemoglu & David H. Autor & David Lyle, 2004. "Women, War, and Wages: The Effect of Female Labor Supply on the Wage Structure at Midcentury," Journal of Political Economy, University of Chicago Press, vol. 112(3), pages 497-551, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Arni, Patrick & Eichhorst, Werner & Spermann, Alexander & Zimmermann, Klaus F., 2014. "Mindestlohnevaluation jetzt und nicht erst 2020," IZA Standpunkte 70, Institute for the Study of Labor (IZA).
    2. Cahuc, Pierre & Charlot, Olivier & Malherbet, Franck & Benghalem, Helène & Limon, Emeline, 2016. "Taxation of Temporary Jobs: Good Intentions with Bad Outcomes?," IZA Discussion Papers 10352, Institute for the Study of Labor (IZA).
    3. Addison, John T. & Portugal, Pedro & Varejão, José, 2014. "Labor demand research: Toward a better match between better theory and better data," Labour Economics, Elsevier, vol. 30(C), pages 4-11.
    4. Arni, Patrick & Eichhorst, Werner & Pestel, Nico & Spermann, Alexander & Zimmermann, Klaus F., 2014. "Kein Mindestlohn ohne unabhängige wissenschaftliche Evaluation," IZA Standpunkte 65, Institute for the Study of Labor (IZA).
    5. KODAMA Naomi & YOKOYAMA Izumi, 2017. "Labor Market Impact of Labor Cost Increase without Productivity Gain: A natural experiment from the 2003 social insurance premium reform in Japan," Discussion papers 17093, Research Institute of Economy, Trade and Industry (RIETI).
    6. Pierre Cahuc & Stéphane Carcillo & Thomas Le Barbanchon, 2014. "Do Hiring Credits Work in Recessions?: Evidence from France," Sciences Po publications 8330, Sciences Po.

    More about this item

    Keywords

    labor demand; wages; employee benefits;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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