The Missing Link -- Data on the Demand Side of Labour Markets

Labour economists have developed elaborate theoretical models and conducted very advanced econometric analysis of the decision making of households. But this emphasis on the supply side of the labour market has not been matched by any corresponding degree of sophistication in empirical analysis of the demand side of the labour market. This has been due in part to the lack of appropriate data. This paper outlines why demand side data which outlines the behaviour of firms in the labour market is necessary for the advancement of labour market analysis. It also discusses the constraints which existing data collection methods impose on labour economics. The paper suggests types of data which might be collected, alternative methodologies for an establishment/worker survey, and discusses some of the theoretical and empirical difficulties that might be encountered in such an exercise.