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Improving Estimation of Labor Market Disequilibrium Through Inclusion of Shortage Indicators

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  • Matthew D. Baird
  • Lindsay Daugherty
  • Krishna B. Kumar

Abstract

While economic studies often assume that labor markets are in equilibrium, there may be specialized labor markets likely in disequilibrium. We develop a new methodology to improve the estimation of a disequilibrium model that incorporates a survey-based shortage indicator into the model and estimation strategy. We demonstrate the gains in information provided by the methodology. We apply the model to the labor market of anesthesiologists, the outcomes of which would be of independent interest. We find improved accuracy in the estimation as well as useful information revealed by the expanded model.

Suggested Citation

  • Matthew D. Baird & Lindsay Daugherty & Krishna B. Kumar, 2017. "Improving Estimation of Labor Market Disequilibrium Through Inclusion of Shortage Indicators," Working Papers WR-1175, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-1175
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    References listed on IDEAS

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    1. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521331494, January.
    2. Kalist, David E. & Molinari, Noelle A. & Spurr, Stephen J., 2011. "Cooperation and conflict between very similar occupations: the case of anesthesia," Health Economics, Policy and Law, Cambridge University Press, vol. 6(2), pages 237-264, April.
    3. Maddala, G S & Nelson, Forrest D, 1974. "Maximum Likelihood Methods for Models of Markets in Disequilibrium," Econometrica, Econometric Society, vol. 42(6), pages 1013-1030, November.
    4. Blaise Melly & Patrick A. Puhani, 2013. "Do Public Ownership And Lack Of Competition Matter For Wages And Employment? Evidence From Personnel Records Of A Privatized Firm," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 918-944, August.
    5. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521589857, January.
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    Cited by:

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    3. Elizabeth Lemmon, 2018. "Utilisation of personal care services in Scotland: the influence of unpaid carers," CINCH Working Paper Series 1802, Universitaet Duisburg-Essen, Competent in Competition and Health.

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