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Supply and Demand in the Labor Market

Author

Listed:
  • David Card

    (Princeton University)

Abstract

This paper presents a survey of recent microeconometric studies of the labor market, focusing on research that emphasizes the possible failure of measured wage rates to separate individual supply and demand decisions. On both the demand and supply sides of the labor market there is evidence that forces from the other side of the market influence employment outcomes through some mechanism other than the wage. On the supply side, this evidence takes the form of correlations between individual labor supply outcomes and market-level measures of employment demand in the individual's local labor market. On the demand side, it takes the form of correlations between firms' employment decisions and measures of their employees' outside opportunities. Both sets of findings are inconsistent with simple supply and demand models, and suggest the need for alternative models of the labor market, which permit an uncoupling of short-run employment decisions from wage rates.

Suggested Citation

  • David Card, 1987. "Supply and Demand in the Labor Market," Working Papers 608, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:228
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    Citations

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    Cited by:

    1. Laisney, François & Pohlmeier, Winfried & Staat, Matthias, 1991. "Estimation of labour supply functions using panel data: a survey," ZEW Discussion Papers 91-05, ZEW - Leibniz Centre for European Economic Research.
    2. Joseph G. Altonji & Christina H. Paxson, 1992. "Labor Supply, Hours Constraints, and Job Mobility," Journal of Human Resources, University of Wisconsin Press, vol. 27(2), pages 256-278.
    3. Paxson, Christina H & Sicherman, Nachum, 1996. "The Dynamics of Dual Job Holding and Job Mobility," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 357-393, July.
    4. Antonia Asenjo & Verónica Escudero & Hannah Liepmann, 2024. "Why Should we Integrate Income and Employment Support? A Conceptual and Empirical Investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 60(1), pages 1-29, January.
    5. Dickinson, Jeffrey, 2020. "Constraints to Tanzanian Agricultural Development: Input Use in Households Under Non-Separability," MPRA Paper 98078, University Library of Munich, Germany.
    6. Senesky, Sarah, 2005. "Testing the intertemporal labor supply model: are jobs important?," Labour Economics, Elsevier, vol. 12(6), pages 749-772, December.
    7. Joshua D. Angrist, 1990. "Does Labor Supply Explain Fluctuations in Average Hours Worked?," NBER Working Papers 3312, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    labor supply; labor demand; employment; unemployment;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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