Journal of Labor Economics Vol. 23 No. 2 2005
Do Employers Provide Insurance against Low Frequency Shocks? Industry Employment and Industry Wages
Abstract
I use panel data to examine whether long‐term changes in industry wages are positively related to long‐term changes in industry employment. Previous research using repeated cross‐sectional data found no systematic relationship between these variables. Using standard fixed effects models to deal with individual heterogeneity, I find a robust positive relationship between changes in composition‐constant industry wages and industry employment. This suggests that growing industries attract less skilled individuals in a manner that biases down the estimated relationship between industry employment and wages in repeated cross‐sectional data. The results imply that supply curves facing industries are elastic but upward sloping.
- DOI
- 10.1086/428026
- Volume
- 23
- Issue
- 2
- Pages
- 313-340
- Language
- en
- Sources
- openalex crossref