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Labor Demand on a Tight Leash

Author

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  • Bossler, Mario

    (Institute for Employment Research (IAB), Nuremberg, Germany ; LASER)

  • Popp, Martin

    (Institute for Employment Research (IAB), Nuremberg, Germany)

Abstract

"We develop a labor demand model that encompasses pre-match hiring cost arising from tight labor markets. Through the lens of the model, we study the effect of labor market tightness on firms’ labor demand by applying novel Bartik instruments to the universe of administrative employment data on Germany. In line with theory, the IV results suggest that a 10 percent increase in labor market tightness reduces firms’ employment by 0.5 percent. When accounting for search externalities, we find that the individual-firm wage elasticity of labor demand reduces from -0.7 to -0.5 at the aggregate level. For the 2015 minimum wage introduction, the elasticities imply only modest disemployment effects mirroring empirical ex-post evaluations. Moreover, the doubling of tightness between 2012 and 2019 led to a significant slowdown in employment growth by 1.1 million jobs." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Bossler, Mario & Popp, Martin, 2023. "Labor Demand on a Tight Leash," IAB-Discussion Paper 202302, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    • Handle: RePEc:iab:iabdpa:202302
    DOI: 10.48720/IAB.DP.2302
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    Cited by:

    1. Bossler, Mario & Liang, Ying & Schank, Thorsten, 2024. "The Devil Is in the Details: Heterogeneous Effects of the German Minimum Wage on Working Hours and Minijobs," IZA Discussion Papers 16964, Institute of Labor Economics (IZA).
    2. Götz, Valentina & Isphording, Ingo E. & Rinne, Ulf & Trenkle, Simon, 2024. "Fachkräftesicherung und Mitarbeiterbindung aus Sicht von Betrieben und Beschäftigten," IZA Research Reports 141, Institute of Labor Economics (IZA).
    3. Erik-Benjamin Borschlein & Mario Bossler & Martin Popp, 2024. "Scarce Workers, High Wages?," Papers 2408.04508, arXiv.org, revised Nov 2024.
    4. Alexander Kubis, 2022. "Parität zwischen Vakanzen und Arbeitslosen am deutschen Arbeitsmarkt fast erreicht [Parity in the German Labour Market Nearly Achieved]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(9), pages 680-682, September.
    5. Popp, Martin, 2024. "Minimum Wages in Concentrated Labor Markets," IZA Discussion Papers 17357, Institute of Labor Economics (IZA).
    6. Börschlein, Erik-Benjamin & Bossler, Mario & Popp, Martin, 2024. "Scarce Workers, High Wages?," IZA Discussion Papers 17447, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Bundesrepublik Deutschland ; IAB-Open-Access-Publikation ; Auswirkungen ; Stellenbesetzung ; Berufsgruppe ; Beschäftigungseffekte ; Beveridgekurve ; Integrierte Erwerbsbiografien ; Kosten ; Lohnelastizität ; Mindestlohn ; Personalbeschaffung ; IAB-Stellenerhebung ; Arbeitskräftemangel ; Arbeitskräftenachfrage ; 2012-2019;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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