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Modelling labour adjustments over the business cycle: evidence from non-linear ARDL model

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In this study we propose a novel approach to modelling wage and workforce adjustments in response to business cycle fluctuations, using non-linear cointegration methods. By exploring the sectoral dimension of the data we address the question of interchangeability between wage and employment adjustments. The results obtained for Polish industry show virtually no sign of a trade-off between price and quantity responses. Workforce resilience to demand fluctuations is rather matched with wage rigidity. Conversely, sectors with more flexible wages tend also to be responsive in terms of workforce.

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  • Konopczak, Karolina, 2019. "Modelling labour adjustments over the business cycle: evidence from non-linear ARDL model," MF Working Papers 35, Ministry of Finance in Poland.
    • Handle: RePEc:ris:mfplwp:0035
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    More about this item

    Keywords

    Labour adjustments; Wage rigidity; Business cycles; Non-linear cointegration;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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