No. 7/2003
ESTIMATING THE ELASTICITY OF LABOUR SUPPLY TO AN ENTERPRISE UTILIZING
A QUASINATURAL EXPERIMENT
Torberg Falch
Abstract:
This paper utilizes institutional features to identify the supply of labour
directed towards individual enterprises. The labour market for Norwegian
teachers is characterized by a high degree of central regulations. In
the empirical period, the only variation in the wage level was determined
centrally, and together with information on whether there is excess demand,
this identifies the elasticity of labour supply. Using a sample selection
model with fixed school effects, the estimated supply elasticity faced
by the individual schools is close to unity and seems to be robust with
respect to the model specification.
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