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Staff, Functions, and Staff Costs at Central Banks: an International Comparison with a Labor- Demand Model

Author

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  • Jorge E. Galán Camacho
  • Miguel Sarmiento Paipilla

    (Banco de la República (Colombia))

Abstract

During the period 2000-2004 central banks sustained a generalized reduction in their staff, which was accompanied, in most cases, with significant increases in staff costs. This could obey to an enhanced interest of central banks in focusing on their core functions. In fact, central banks have changed the ways they perform their operative functions (e.g. currency operations, payment systems operation, printing notes, etc.) through different strategies aimed at gathering the participation of third parties. These strategies differ according to the relationship that central banks have with the financial sector and the government, as well as to their historical tradition and modernization trend. To explain the effect of these changes on the staff, we estimated a short-term labor demand function for 66 central banks using a panel data model with random effects. Results indicate that central banks´ labor demand is strongly determined by the country´s population, economic development level and changes in operative functions, as well as by staff costs. In addition, we found a low employment-wage elasticity suggesting the presence of a flexible budgetary constrain in central banks.
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Suggested Citation

  • Jorge E. Galán Camacho & Miguel Sarmiento Paipilla, 2007. "Staff, Functions, and Staff Costs at Central Banks: an International Comparison with a Labor- Demand Model," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 131-179, July-Dece.
  • Handle: RePEc:cml:moneya:v:xx:y:2007:i:2:p:131-179
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    References listed on IDEAS

    as
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    Cited by:

    1. Jorge E. Galán and & Miguel Sarmiento, 2008. "Banknote Printing at Modern central Banking: Trends, Costs and Efficiency," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 217-262, July-Dece.
    2. Jorge Ponce, 2010. "A Normative Analysis of Banking Supervision: Independence, Legal Protection and Accountability," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 141-181, July-Dece.
    3. Miguel Sarmiento, 2010. "Central Bank Economic Research: Output, Demand, Productivity, and Relevance," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 211-240, July-Dece.
    4. Clara Machado & Carlos León & Miguel Sarmiento & Freddy Cepeda & Orlando Chipatecua & Jorge Cely, 2011. "Riesgo Sistémico Y Estabilidad Del Sistema De Pagos De Alto Valor En Colombia: Análisis Bajo," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 29(65), pages 106-175, Junio.
    5. Odean B. White, 2008. "Determinants of Commercial Banks’ Cost of Financial Intermediation in Jamaica: a Maximum Likelihood Estimation Approach," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 129-159, July-Dece.
    6. Freddy H. Castro & Ingrid Monroy, 2011. "Demanda laboral en la Banca Central: análisis de tendencias 2000-2009," Borradores de Economia 662, Banco de la Republica de Colombia.
    7. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093, March.

    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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