A dynamic heterogeneous labour demand model for German manufacturing

Martin Falk and Bertrand Koebel

No 00-16, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: 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.

Keywords: heterogeneous labour demand; dynamics; price elasticities (search for similar items in EconPapers)
JEL-codes: E23 J21 J31 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (23)

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Related works:
Journal Article: A dynamic heterogeneous labour demand model for German manufacturing (2001)
Working Paper: A dynamic heterogeneous labour demand model for German manufacturing (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:5292

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