Working Paper Series, Department of Economics, Uppsala University
No 2006:7:
Testing Theories of Job Creation: Does Supply Create Its Own Demand?
Mikael Carlsson ()
, Stefan Eriksson ()
and Nils Gottfries ()
Abstract: How well do alternative labor market theories explain
variations in net job creation? According to search-matching theory, job
creation in a firm should depend on the availability of workers
(unemployment) and on the number of job openings in other firms
(congestion). According to efficiency wage and bargaining theory, wages are
set above the market clearing level and employment is determined by labor
demand. To compare models, we estimate an encompassing equation for net job
creation on firm-level data. The results support demand-oriented theories
of job creation, whereas we find no evidence in favor of the
search-matching theory.
Keywords: Job Creation; Involuntary Unemployment; Search-Matching; Labor Demand; (follow links to similar papers)
JEL-Codes: E24; J23; J64; (follow links to similar papers)
23 pages, February 17, 2006, Revised October 23, 2008
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