Labour demand, elasticity and adjustment : a dynamic model with firm and time specific adjustment and application to finnish firm data

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dc.contributor Helsingin yliopisto, Yleisen valtio-opin laitos fi
dc.contributor University of Helsinki, Department of Political Science en
dc.contributor Helsingfors universitet, Allmän statslära, Institutionen för sv Siljander, Eero 2009-09-08T09:43:31Z 2009-09-08T09:43:31Z 2004-12-01 en
dc.description Endast sammandrag. Inbundna avhandlingar kan sökas i Helka-databasen ( Elektroniska kopior av avhandlingar finns antingen öppet på nätet eller endast tillgängliga i bibliotekets avhandlingsterminaler. sv
dc.description Only abstract. Paper copies of master’s theses are listed in the Helka database ( Electronic copies of master’s theses are either available as open access or only on thesis terminals in the Helsinki University Library. en
dc.description Vain tiivistelmä. Sidottujen gradujen saatavuuden voit tarkistaa Helka-tietokannasta ( Digitaaliset gradut voivat olla luettavissa avoimesti verkossa tai rajoitetusti kirjaston opinnäytekioskeilla. fi
dc.description.abstract This thesis deals with labour demand, the elasticises of labour demand and adjustment through the theory of labour economics, an econometric model and its application to panel data set of finnish firms. First a continues and discrete time model of labour demand are specified with strictly convex or quadratic adjustment costs. In the econometric part of the study a model for labour demand with firm and time specific elasticises and adjustment are specified. The adjustment parameter is also explicitly modeled. From the econometric model for labour demand the wage-, output-, capital- and trend elasticity are calculated for each observation in time. Then these elasticities are averaged according to the factor of interest which in this thesis are 1.time, 2.industry and 3.size of firm. The same applies for the adjustment parameter. Especially the wage elasticity is of special interest as it describes the effects of the tax wedge of labour on labour demand. In the econometric part of the thesis the elasticises and adjustment of labour demand are estimated from an unbalanced panel data set of the 500 largest enterprises in Finland as measured by turnover. The data covers the years from 1986 to 2003 and has a total of 8185 observations. As an econometric research method a fixed effects nonlinear seemingly unrelated regressions (SUR) algorithm is used to estimate labour demand. The results indicate that the wage and output elasticity of labour demand have increased during the observed period from 1986 to 2003. The wage elasticity has increased from -0.6 to -0.75 and the output elasticity from 0.8 to 0.9 in the long run during the data period. The same pattern is observed for these elasticises in the short run as well. Technical change has decreased labour demand by approximately two percent p.a. in the short and long run. These results confirm that finnish labour markets have become more flexible due to increased competition and integration of product markets which in turn are due to the single market policies of the EU and the effects of globalization on labour markets. The only surprise in the results is that the adjustment parameter has decreased slightly during the end of the observation period which points to mounting adjustment costs of labour demand and rigidities in the adjustment of labour markets. The results also show that the elasticises and adjustment of labour demand vary strongly with the industry of the firm. This points to the heterogeneity across firms and industries which validates the research strategy and methodology used here and should not be overlooked in empirical research in general. On the other hand firm size is not found to be a significant factor in determining the elasticises or adjustment. Therefore the explicit modeling of firm and time specific adjustment should be taken into account in future research on labour demand and its elasticises. en
dc.language.iso sv en
dc.subject Labour markets en
dc.subject labour demand en
dc.subject elasticity en
dc.subject adjustment en
dc.title Labour demand, elasticity and adjustment : a dynamic model with firm and time specific adjustment and application to finnish firm data en
dc.identifier.laitoskoodi 711 en
dc.type.ontasot Licentiate thesis en
dc.type.ontasot Lisensiaatintyö fi
dc.type.ontasot Licentiatsavhandling sv

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