How Elastic is the Demand for Labour in Belgian Enterprises?Results from Firm Level Accounts Data, 1987–1994
Konings, Jozef Roodhooft, Filip
Konings, Jozef
Roodhooft, Filip
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Publication Type
Journal article
Editor
Supervisor
Publication Year
1997-07
Journal
De Economist
Book
Publication Volume
145
Publication Issue
2
Publication Begin page
229
Publication End page
241
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Abstract
This paper analyzes wage elasticities using a panel dataset of 2800 large Belgian firms over the period 1987–1994. We explore various functional forms and find that the short-run wage elasticity varies between −0.37 and −0.65, while the long-run elasticity is robustly estimated to be larger than 1 in absolute value. These results are striking for they are much higher than those reported in previous studies using macroeconomic time-series data. This suggests that labour costs are more important in determining the demand for labour than initially was believed.
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Keywords
38 Economics, 3801 Applied Economics, 3802 Econometrics