Are estimates of labour demand functions mere statistical artefacts?
This paper considers the estimation of putative neoclassical aggregate labour demand functions using constant price value data. Regression results normally find that employment is negatively related to the real wage and that the constant-output elasticity of employment with respect to the real wage is about -0.3. This is taken as evidence that unemployment is the result of the real wage being too high, ceteris paribus. This paper shows that these estimates are purely the result of an underlying identity and cannot be interpreted as implying any causal relationship and, as such, they have no policy implications.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 23 (2009)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CIRA20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CIRA20|