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Intertemporal Substitution and Labour Supply of Bosnian SME’s

Author

Listed:
  • Ada Šabic-Lipovaca

    (University of Bihac, Bosnia and Herzegovina)

  • Wadim Strielkowski

    (University of Cambridge, Judge Business School, Cambridge)

  • Yuriy Bilan

    (University of Szczecin, Poland)

Abstract

Our paper aims at testing the intertemporal substitution hypothesis (ISH) for small and medium enterprises (SMEs) in Bosnia and Herzegovina. The hypothesis predicts a positive relationship between the hours worked and the transitory changes in wages. We tested the hypothesis using the data on the daily income and worked hours collected via the survey questionnaire among small entrepreneurs in North-Western Bosnia and Herzegovina. The estimated wage elasticities turned out to be positive and different from zero, according to which it appears that the hypothesis of negative wage elasticities was not backed up by the empirical evidence. Our findings imply that the intertemporal labour substitution hypothesis found evidence and that we can reject the daily targeting hypothesis. We also argue that Bosnian entrepreneurs tend to pursue profits across working days because their main motive for running a business is the accumulation of capital and wealth, so that they follow the pattern of intertemporal labour substitution. The findings can be explained by an unfavourable business climate in Bosnia and Herzegovina, which is a result of a long-lasting transition process the country is still undergoing.

Suggested Citation

  • Ada Šabic-Lipovaca & Wadim Strielkowski & Yuriy Bilan, 2016. "Intertemporal Substitution and Labour Supply of Bosnian SME’s," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 18(43), pages 634-634, August.
    • Handle: RePEc:aes:amfeco:v:43:y:2016:i:18:p:634
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    References listed on IDEAS

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    1. Zoltan Musinszki & Magdolna Vallaseki & Gabor Melypatak & Erika Horvathne Csolak & Katalin Liptak, 2020. "Workaholism and a New Generation – Labour Market Survey among Hungarian and Romanian Youth," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 22(Special 1), pages 1227-1227, November.

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    More about this item

    Keywords

    labour supply; elasticity; intertemporal substitution; daily targeting; SMEs; Bosnia and Herzegovina.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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