Regional Differences in Labor Demand in The United States

A possible explanation for the lack of attention to regional demand variation is that analysts have assumed implicitly that the elasticity at demand was roughly comparable among regions. However, this assumption does not seem tenable, the purpose of this study was to fill this important gap in the literature. The hypothesis was that there were significant differences in the elasticity of the demand for labor. Knowledge of differences in demand elasticity for labor can be extremely important to policy makers at both the state and federal levels. At the federal level, knowledge of differences in regional demand elasticities would allow more detailed estimates of the impact of a variety of programs that affect waves and output. In the first section, a brief theoretical framework for analyzing the demand for labor is presented. In Section II, this framework is used to develop a model to analyze interregional differences in the elasticity of demand for labor. In Section III, data are discussed and empirical estimates of the model are presented. Finally, the article concludes with a discussion of some policy implications. -from Authors