Resource title

A dynamic heterogeneous labour demand model for German manufacturing

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Resource description

This paper presents an application of the Generalised Error Correction Model (GECM) for heterogeneous factor demands based on the quadratic cost function. Using data for 26 West German manufacturing industries over the period 1976-1995, it turns out that less general specifications such as the partial adjustment and the static AR(1) model are rejected. Furthermore, both shortrun and long-run labour demands of different skill classes are inelastic. Unskilled labour is found to have a somewhat higher wage elasticity in absolute terms than medium-skilled labour. A small part of shift in demand away from unskilled labour can be explained by the substitutability relationship between intermediate materials and unskilled labour. Between 6 and 13 percent of the observed shift towards high-skilled labour can be explained by capital accumulation.

Resource author

Martin Falk, Bertrand M. Koebel

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Resource publish date

Resource language

eng

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text/html

Resource resource URL

http://hdl.handle.net/10419/24362

Resource license

Adapt according to the presented license agreement and reference the original author.