Labour supply under demand side constraints in the USA and the FRG : a comparative analysis using PSID and GSOEP data

  • This paper provides an empirical assessment of hypotheses that identify causes of demand side constraints of individual labour supply. In a comparative study for the USA and the FRG we focus on analysing the effect of productivity gaps (industry wage growth beyond productivity growth), industry investment intensity and regional labour market conditions on individual employment probabilities. Furthermore, we investigate whether demand side constraints of labour supply can be caused by a spill over from commodity markets. Efficiency wage theory and the theory of inter-industry wage differentials are utilised to derive identifying restrictions that are applicable to the labour supply models for both countries. The econometric contribution of the paper is the derivation and application of a two step estimation method for the class of simultaneous random effects double hurdle models, of which the labour supply model employed in this paper is a special case. To provide the empirical basis for the comparative study, the Panel Study of Income Dynamics and the German Socio-Economic Panel are linked to the OECD’s International Sectoral Database. JEL classification: C33, C34, J64, O57

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Author:Joachim Grammig, Reinhard HujerGND
Parent Title (German):Frankfurter Volkswirtschaftliche Diskussionsbeiträge No. 59
Document Type:Working Paper
Date of Publication (online):2005/11/22
Year of first Publication:1999
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/11/22
Tag:demand side constraints of labour supply; international comparison; labour markets in USA and FRG; panel data
Edition:Revised Version March 1999
Source:Frankfurter Volkswirtschaftliche Diskussionsbeiträge No. 59 , Revised Version March 1999 ,
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht