Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24362
Authors: 
Falk, Martin
Koebel, Bertrand M.
Year of Publication: 
2000
Series/Report no.: 
ZEW Discussion Papers 00-16
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.
Subjects: 
heterogeneous labour demand
dynamics
price elasticities
JEL: 
J31
J21
E23
Document Type: 
Working Paper

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