Browsing by Subject "Labour Demand"

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  • Siljander, Eero (2004)
    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.
  • Huttunen, Kristiina (2002)
    This study investigates the changes in the skill structure of labour demand using panel data on Finnish private sector establishments, with linked information on worker characteristics. We also examine whether directly observable measures of technological change and trade explain the changes in skill structure of Finnish manufacturing sector plants' work force. Worker's skill level is defined by both education and age. The data on Finnish private sector establishments for years 1988-1998 reveal that the skill structure of work force has shifted towards highly educated and older. The increase in the share of both highly and less educated older workers has mainly occurred within establishments while the increase in the share of younger highly educated workers has occurred between establishments and by entry of new establishments. The decomposition analysis by plant characteristics reveals that the increase in the share of highly educated younger workers is attributed to relative increase in employment of exporting and R&D intensive plants, while the increase in the share of older workers has occurred equally within all plants. The panel estimation results without plant controls show that increase in the selected technology variables, industry- and firm-level R&D intensity increases significantly the demand for highly educated younger workers while the impact of this variables is much less pronounced or even insignificant for older highly educated workers. However, the fixed effects estimation results provide no evidence that R&D intensity would have an impact on the within-plant changes in the skill mix. With respect to the export-share variable the estimation results provide some evidence that trade decreases the demand for older workers.