Wednesday, May 2, 2011 
12:00 pm - 2:00 pm 
Public Affairs 3333


The Elasticity of Labor Supply to the Firm over Business Cycle

Presented by Todd Sorensen, UC Riverside
Discussant: Chris Erickson, UCLA Anderson School of Management


About the Speakers:

Todd SorensenTodd Sorensen is currently an Assistant Professor at the University of California, Riverside. His primary area of interest is the study of migration issues. In his thesis, he models how a localized increase in enforcement along the U.S.-Mexico border will affect the crossing decisions made by migrants, finding that a significant proportion of migrants deterred from crossing in one sector will continue to cross into the U.S. through an alternative location. Todd also studies issues related to sentencing equity in the U.S. criminal justice system. Todd is currently an IRLE visiting scholar for the 2011-2012 academic year.


Chris EricksonChris Erickson studies various aspects of industrial relations in the local, national and world economies. His research focuses on comparative industrial relations systems, industrial relations and labor market transformation in different regions of the world, wage determination, collective bargaining, innovations in union organizing, and skills development. He is Senior Associate Dean for Global Initiatives, as well as director of the Center for International Business Education and Research and UCLA faculty director of the dual-degree UCLA - National University of Singapore Global Executive MBA. He has been an associate editor at the British Journal of Industrial Relations and Group & Organization Management, and has also had long associations with the UCLA Institute for Research on Labor and Employment and the Labor and Employment Relations Association. He has been at UCLA Anderson since 1991, and was previously a faculty member at the Cornell Industrial and Labor Relations School. He has a Ph.D. in Economics from MIT and a B.A. from Yale, and is a graduate of John W. North High School in Riverside, California.

Talk Abstract : Recent work suggests that the labor elasticity of supply to the firm is finite. In other words, labor markets are not perfectly competitive. We provide the first estimates of the degree of labor market imperfections over a long period of time with significant variation in the state of the macroeconomy. Using data from the Ford Motor Company from 1918 through 1940 we analyze the labor elasticity of supply to the firm over the business cycle. We find significant variation in this parameter over time and consistent with predictions from a simple search model we find evidence of it being procyclical. Our analysis also contributes two methodological extensions to the empirical monopsony literature. First, we are able to relax the assumption that all employee separations in the firm are replaced by recruits. Second, we use data that allows us to isolate workers who quit for voluntary reasons. Both have significant impacts on our estimates.



This talk is cosponsored by the UCLA Department of Economics and the von Gremp Seminar in Entrepreneurial and Economic History