Improving Estimation of Labor Market Disequilibrium through Inclusion of Shortage Indicators

28 Pages Posted: 11 Jan 2017

See all articles by Matthew Baird

Matthew Baird

RAND Corporation

Lindsay Daugherty

RAND Corporation

Krishna Kumar

RAND Corporation - Labor and Population

Date Written: October 2016

Abstract

While economic studies often assume that labor markets are in equilibrium, there may be specialized labor markets likely in disequilibrium. We develop a new methodology to improve the estimation of a disequilibrium model that incorporates a survey-based shortage indicator into the model and estimation strategy. We demonstrate the gains in information provided by the methodology. We apply the model to the labor market of anesthesiologists, the outcomes of which would be of independent interest. We find improved accuracy in the estimation as well as useful information revealed by the expanded model.

Suggested Citation

Baird, Matthew and Daugherty, Lindsay and Kumar, Krishna, Improving Estimation of Labor Market Disequilibrium through Inclusion of Shortage Indicators (October 2016). RAND Working Paper Series WR- 1175. Available at SSRN: https://ssrn.com/abstract=2897147 or http://dx.doi.org/10.2139/ssrn.2897147

Matthew Baird (Contact Author)

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Lindsay Daugherty

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Krishna Kumar

RAND Corporation - Labor and Population ( email )

United States

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