Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis
Kamil Galuscak and
Working Papers from Czech National Bank
Using a large panel of Czech manufacturing firms with 50 or more employees, we update the firm-level labour demand elasticity estimates for 2002-2009. The economic crisis of 2008-2009 provides a source of variation needed for getting estimates that cover not only times of growth, but also a period of economic contraction. We find that in normal times (until 2007), the short-term elasticity is -0.53 with respect to wages and 0.43 with respect to sales, while the long-term elasticities are close to or below unity, standing at -0.94 for wages and 0.76 for sales. Both the wage and sales elasticities increased during the crisis, suggesting that firms became demand constrained, but only the sales elasticity is significantly different. The long-term wage elasticity close to -1 in the period before and during the crisis suggests that firms' employment decisions are made within fixed budgets. Finally, we find that the inclusion of workers hired through temporary work agencies does not significantly affect the results, indicating that firms take into account total labour when deciding on employment and that hired workers are used as an equal labour demand channel with lower adjustment costs. As a robustness check, our results are qualitatively comparable with the narrative evidence from an ad-hoc firm-level survey on wage and price formation conducted in 2007 and 2009 within the ESCB Wage Dynamics Network.
Keywords: Czech Republic; elasticity; firm-level data; labour demand; sales elasticity; wage elasticity; the crisis of 2008-2009. (search for similar items in EconPapers)
JEL-codes: C23 J23 J33 P23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-hme, nep-lab, nep-lma and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.cnb.cz/export/sites/cnb/en/economic-re ... wp/cnbwp_2011_15.pdf
Working Paper: Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2011/15
Access Statistics for this paper
More papers in Working Papers from Czech National Bank Contact information at EDIRC.
Bibliographic data for series maintained by Jan Babecky ().