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New Measures of Labor Cost: Implications for Demand Elasticities and Nominal Wage Growth

In: The Measurement of Labor Cost

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  • Daniel S. Hamermesh
Abstract
This study develops alternative quarterly measures of labor costs that refine the published data on hourly earnings and hourly compensation for the period 1953-1978. These new series account for deviations of hours paid for from hours worked, for the tax treatment of wages under the corporate income tax, and for variations in the user cost of training. They generally produce somewhat higher elasticities of labor demand, and explain variations in employment over time slightly better than do the published series. They also provide a different view of the recent path of wage inflation in the United States, suggesting that nominal wage growth has been more responsive to variations in the rate of price inflation than the published labor-cost series indicate. A data appendix lists the values of these new series; one series (that which adjusts for the hours paid/hours worked distinction) can be updated with readily avail- able data by persons interested in using these more appropriate measures of the cost of labor facing employers.
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Suggested Citation

  • Daniel S. Hamermesh, 1983. "New Measures of Labor Cost: Implications for Demand Elasticities and Nominal Wage Growth," NBER Chapters, in: The Measurement of Labor Cost, pages 287-308, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:7380
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    References listed on IDEAS

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    1. Solow, Robert M, 1980. "On Theories of Unemployment," American Economic Review, American Economic Association, vol. 70(1), pages 1-11, March.
    2. D. Grubb & R. Jackman & R. Layard, 1982. "Causes of the Current Stagflation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(5), pages 707-730.
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    11. Clark, Kim B & Freeman, Richard B, 1980. "How Elastic is the Demand for Labor?," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 509-520, November.
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    14. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    15. Daniel S. Hamermesh, 1976. "Econometric Studies of Labor Demand and Their Application to Policy Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 11(4), pages 507-525.
    16. Chirinko, Robert S, 1980. "The Real Wage Rate over the Business Cycle," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 459-461, August.
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    Cited by:

    1. Glosser, Stuart M. & Golden, Lonnie, 1997. "Average work hours as a leading economic variable in US manufacturing industries," International Journal of Forecasting, Elsevier, vol. 13(2), pages 175-195, June.
    2. Timothy Dunne & Mark J Roberts, 1993. "The Long-Run Demand for Labor: Estimates From Census Establishment Data," Working Papers 93-13, Center for Economic Studies, U.S. Census Bureau.
    3. repec:eee:labchp:v:1:y:1986:i:c:p:429-471 is not listed on IDEAS
    4. Hanan Nazier, 2019. "Estimating Labor Demand Elasticities and Elasticities of Substitution in Egyptian Manufacturing Sector: A Firm-Level Static Analysis," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 62(4), pages 549-575, December.
    5. Matthew J. Slaughter, 1997. "International Trade and Labor-Demand Elasticities," NBER Working Papers 6262, National Bureau of Economic Research, Inc.
    6. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.

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