Econometric model for estimating the Georgian labour market equilibrium

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Ivane Javakhishvili Tbilisi State University Press
This article proposes a method to estimate the labor market model consisting of regression equations. It takes into account the specifics of the market mechanism and makes it possible to fully or partially identify the functions of labor supply and demand, even when the only data available is on the real wages and the number of employees. Unlike the traditional approach, the proposed method is based on the assumption that not every pair of real wages and the number of employees included in the data sample corresponds to the market equilibrium. The estimation of equations of this model involves a two-step process. First, using the sample of data on real wages and the number of employees, the employment line (curve) is estimated, and the point of its maximum, which corresponds to the point of market equilibrium, is defined. Then, given the location of the equilibrium point, subsamples that define the demand for labor and the labor supply are identified from the total sample, and their respective equations are constructed. The article demonstrates how to apply this method, using the Georgian labor market as an example.
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labor market model, labor supply function, labor demand function, workforce employment line, equilibrium point
VII International Scientific Conference: "Challenges of Globalization in Economics and Business", Tbilisi, 2022, pp. 28-35