Working Paper: NBER ID: w0821
Authors: 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.
Keywords: Labor Costs; Demand Elasticities; Nominal Wage Growth
JEL Codes: J38; J30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| new measures of labor costs (J39) | labor demand elasticities (J23) |
| new measures of labor costs (J39) | nominal wage growth (J39) |
| new measures of labor costs (J39) | employment variations (J63) |
| traditional measures (C52) | labor demand elasticities (J23) |
| traditional measures (C52) | nominal wage growth (J39) |
| traditional measures (C52) | employment variations (J63) |