The Sensitivity of Labor Demand Functions to Choice of Dependent Variable

Services. The opinions expressed in the paper are solely those of the author and do not necessarily reflect the views of DHHS or the Institute. Abstract This paper investigates whether the parameters of labor demand functions are sensitive to alternative methods of estimation. 'The assumption that the production technology is of the Generalized Leontief type implies that, the demand system can be estimat~d by analyzing cross-section differences in earnings across labor markets, by studying longitudinal changes in earnings within a labor market, or by investigating cross-section differences in labor for~e participation rates across labor markets. The estimation of these " models on the 1970 and 1980 Public Use Samples from the U.S. Census reveals that the estimates of labor demand functions are indeed quite robust to major specification changes.