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Models of labour demand with fixed costs of adjustment: a generalised tobit approach

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Author Info
Francesca Di Iorio () (Dipartimento di Scienze Statistiche - Universita' degli Studi di Napoli Federico II)
Stefano Fachin () (Facolta' di Scienze Statistiche, Universita' degli Studi di Roma "La Sapienza")

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Abstract

Traditional models of factor demand rely upon convex and symmetric adjustment costs: however, the fortune of this highly restrictive model is due more to analytical convenience than to actual empirical relevance. In this note we first examine the model of employment adjustment under the more realistic hypothesis of fixed costs, show that it can be cast in the form of a Double Censored Random Effect Tobit Model, derive its likelihood function, and finally evaluate the empirical performance of the ML estimators through a Monte Carlo experiment. The performances, although strongly dependent on the degree of censoring, appear promising.

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File URL: http://www.economicsbulletin.com/2004/volume3/EB-04C50002A.pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 3 (2004)
Issue (Month): 31 ()
Pages: 1-8
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:3:y:2004:i:31:p:1-8

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Related research
Keywords: Dynamic labour adjustment; fixed costs; Random Effect Double Censored Tobit;

Find related papers by JEL classification:
C5 - Mathematical and Quantitative Methods - - Econometric Modeling

References listed on IDEAS
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  1. Steve J. Davis & John Haltiwanger, 1991. "Gross Job Creation, Gross Job Destruction and Employment Reallocation," NBER Working Papers 3728, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Hamermesh, Daniel S, 1995. "Labour Demand and the," Economic Journal, Royal Economic Society, vol. 105(430), pages 620-34, May. [Downloadable!] (restricted)
  3. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September. [Downloadable!] (restricted)
    Other versions:
  4. Dagenais, Marcel G, 1975. "Application of a Threshold Regression Model to Household Purchases of Automobiles," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 275-85, August. [Downloadable!] (restricted)
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This page was last updated on 2009-10-20.

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