LABOR ADJUSTMENT DYNAMICS: AN APPLICATION OF SYSTEM GMM

Pedro Esperança (pedro.esperanca@exeter.ox.ac.uk)
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Pedro Esperança: Nova School of Business of Economics, Universidade Nova de Lisboa, Portugal

No 43, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: This paper analyzes the dynamics of the Portuguese labor market using micro data: implications of adjustment costs to input factor adjustment throughout the business cycle are discussed; the current situation of the Portuguese labor market is reviewed; and measures of speed of adjustment for different types of labor (namely, the number of workers and the number of hours employed by firms) are obtained using a System GMM estimator and compared to those obtained for other countries. Additionally, we provide the median adjustment lag and short- and long-run labor demand elasticities with respect to firms' wages and sales. We conclude that the Portuguese labor market is slow in adjustment relative to other countries, while there is no evidence to support the claim that adjustment through the number of hours employed is faster than the adjustment through the number of workers employed.

Keywords: Labor demand; Adjustment dynamics; Adjustment costs; System GMM; Median adjustment lag (search for similar items in EconPapers)
JEL-codes: C33 D12 J23 J32 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2011-12, Revised 2011-12
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_43.pdf First version, 2011 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mde:wpaper:0043

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