On the endogeneity of output in dynamic labour-demand models

C. Gorter, W. Hassink and Peter Nijkamp
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C. Gorter: Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics

No 19, Serie Research Memoranda from VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics

Abstract: This paper investigates the endogeneity of output in the context of the standard dynamic labour-demand model. Using a panel of Dutch firms, we find that the assumption of endogeneity of output cannot be rejected, so that an adjusted procedure has to be followed in which information on the output expectations of entrepreneurs is used. The estimated effect of the endogenous, current output variable on employment appears to be significantly larger than the effect of the exogenous, expected output variable. The adjustment parameter of employment is however, remarkably robust against distinct specifications for output.

Date: 1996
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Related works:
Chapter: On the Endogeneity of Output in Dynamic Labour-Demand Models (2004)
Journal Article: On the Endogeneity of Output in Dynamic Labour-Demand Models (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:vua:wpaper:1996-19

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