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Employment and labour hoarding: a production function approach

Author

Listed:
  • Vella, Melchior

    (University of Malta)

Abstract

Purpose – This paper aims to test the hypothesis that the effect of production slowdown on labour demand can be muted by labour hoarding. Design/methodology/approach – This study adopts a production function approach, using data from Malta, a small state in the EU. Findings – The results confirm the hypothesis and indicate that firms are normally prepared to employ and dismiss more workers in the long run than in the short run. Practical implications – This finding has important implications for developed countries, including that labour hoarding can be of certain relevance in times of economic slowdown as shocks are absorbed by internal flexibility. Originality/value – The results of this study add on to the existing literature in two ways. First, this study compares two industries –manufacturing and financial services– for which the former sector received support to hoard labour after the financial turmoil of 2008. Consequently, the dominance of labour hoarding in manufacturing relative to financial services is uncovered and the effect of hoarding practices on labour demand is estimated. Second, Malta is an interesting case because it is one of the smallest economies in the world and faces a high degree of vulnerability because of constraints associated with small size and insularity. As a result, firms adopt policy-induced measures to minimise adjustment costs

Suggested Citation

  • Vella, Melchior, 2018. "Employment and labour hoarding: a production function approach," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 23(46), pages 230-246.
    • Handle: RePEc:ris:joefas:0129
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    Cited by:

    1. repec:thr:techub:1007:y:2020:i:1:p:1-17 is not listed on IDEAS
    2. Kamila Radlińska & Bogusława Gardziejewska, 2022. "The Seasonal Labor Hoarding in Tourist Enterprises—Choice or Necessity?," Sustainability, MDPI, vol. 14(12), pages 1-15, June.
    3. Allan Webster & Sangeeta Khorana & Francesco Pastore, 2021. "The labour market impact of COVID-19: early evidence for a sample of enterprises from Southern Europe," International Journal of Manpower, Emerald Group Publishing Limited, vol. 43(4), pages 1054-1082, November.
    4. Ugur, Mehmet, 2023. "Innovation, market power and the labour share: evidence from OECD industries," Greenwich Papers in Political Economy 38374, University of Greenwich, Greenwich Political Economy Research Centre.
    5. Effnu Subiyanto, 2020. "Violating Labour's Rights, A Failure Understanding Establishment of SOEs Holdings: Evidence at the State-owned Enterprise Cement Holding of PT Semen Indonesia (Persero) Tbk," Technium Social Sciences Journal, Technium Science, vol. 7(1), pages 1-17, May.

    More about this item

    Keywords

    Labour demand; CES production function; Disequilibrium model; Labour hoarding;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

    Statistics

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