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Changing Elasticities of Labor Demand in U.S. Manufacturing


  • Daniel Rich



This paper provides a link between long-standing labor demand elasticity estimates in U.S. manufacturing and recent studies of wage patterns and labor demand shifts in response to technical change and international trade. We document asymmetric changes in labor demand elasticities including an absolute and relative increase in own-wage elasticity of demand for production workers. Separate estimates of substitution and scale responses imply that skill-biased technical change dominates increased product market competition as a source of the observed changes in labor demand elasticity. Copyright International Atlantic Economic Society 2010

Suggested Citation

  • Daniel Rich, 2010. "Changing Elasticities of Labor Demand in U.S. Manufacturing," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(2), pages 157-168, June.
  • Handle: RePEc:kap:atlecj:v:38:y:2010:i:2:p:157-168
    DOI: 10.1007/s11293-010-9223-5

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    References listed on IDEAS

    1. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
    2. Mary Amiti & Shang-Jin Wei, 2005. "Fear of service outsourcing: is it justified?," Economic Policy, CEPR;CES;MSH, vol. 20(42), pages 308-347, April.
    3. Kesselman, Jonathan R & Williamson, Samuel H & Berndt, Ernst R, 1977. "Tax Credits for Employment Rather Than Investment," American Economic Review, American Economic Association, vol. 67(3), pages 339-349, June.
    4. Haskel, Jonathan E, 2000. "Trade and Labor Approaches to Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 397-408, August.
    5. Paul, Catherine J Morrison & Siegel, Donald S, 2001. " The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(2), pages 241-264, June.
    6. Ben Shippen, 1999. "Labor market effects of import competition: Theory and evidence from the textile and apparel industries," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(2), pages 193-200, June.
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    More about this item


    Labor demand; Technical change; Trade; J23; D24; F16; J51;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects


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