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Long-run Asymmetries in Labor Demand: Estimating Wage Elasticities of Labor Demand Using a Fractional Panel Probit Model

  • Models of labor demand usually use cost or production functions to derive profit-maximizing firm performance. These models often rely on the assumption of symmetrical behavior,i.e., the response to a positive or negative wage shock of the same relative size is identical to theshock, and the estimated labor demand elasticities are the same for increasing and decreasingemployment. However, behavioral economics models like loss aversion and endowment effectsquestion the assumption of symmetry in labor demand. In addition, the influence of a labor shortageshould be reflected in the investigations. Estimations of Fractional Panel Probit models for threedifferent skill levels are applied to evaluate these findings with a large panel of Germanestablishments. The results indicate asymmetrical structures for long-run own-wage elasticities andfor some cross-wage elasticities, putting some doubt on the assumption of strict rationality in labordemand and indicating the influence of labor shortages.

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Metadaten
Author:Arnd Kölling
URN:urn:nbn:de:kobv:b721-opus4-22659
URL:https://onlinelibrary.wiley.com/doi/full/10.1111/labr.12163
DOI:https://doi.org/10.1111/labr.12163
Publisher:Fondazione Giacomo Brodolini and John Wiley & Sons Ltd
Document Type:Article
Language:English
Date of first Publication:2019/08/19
Publishing Institution:Hochschulbibliothek HWR Berlin
Release Date:2020/05/28
Volume:2020
Issue:LABOUR 34 (1) 26–47 (2020)
Page Number:22
Institutes:FB II - Duales Studium Wirtschaft/Technik
Open Access Publikationen (DINI-Set):open_access
Open Access Publikations financed by DEAL Project:hybrid
Licence (German):License LogoCreative Commons - CC BY-NC - Namensnennung - Nicht kommerziell 4.0 International