Elasticities of Demand for Educated Labor and Elasticities of Supply of Educated Labor

Richard B. Freeman

NBER Working Paper No. 1042
Issued in December 1982
NBER Program(s):   LS

This paper reviews a variety of estimates of the demand and supply elasticities of educated labor. It finds that elasticities of substitution between more and less educated labor range fran 1.0 to 2.0 and that elasticities of the supply of students to colleges are also on the order of 1.0 to 2.0 while elasticities of supply to specific professions are on the order of 2.0 to 3.0. With elasticities of this magnitude, wages and employment depend on both supply and demand factors, with shifts of either schedule influencing both market outcome variables.

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