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On the Endogeneity of Output in Dynamic Labour-Demand Models

Author

Listed:
  • Gorter, Cees
  • Hassink, Wolter
  • Nijkamp, Peter
  • Pels, Eric

Abstract

This paper investigates the endogeneity of output in the context of the standard dynamic labour-demand model. Using a panel of Dutch firms we find that the assumption of endogeneity of output cannot be rejected, so that an adjusted procedure has to be followed in which information on the output expectations of entrepreneurs is used. The estimated effect of the endogenous, current output variable on employment appears to be significantly larger than the effect of the exogenous, expected output variable. The adjustment parameter of employment is however, remarkably robust against distinct specifications for output. Coauthors are Wolter Hassink, Peter Nijkamp, and Eric Pels.

Suggested Citation

  • Gorter, Cees & Hassink, Wolter & Nijkamp, Peter & Pels, Eric, 1997. "On the Endogeneity of Output in Dynamic Labour-Demand Models," Empirical Economics, Springer, vol. 22(3), pages 393-408.
    • Handle: RePEc:spr:empeco:v:22:y:1997:i:3:p:393-408
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    Cited by:

    1. Alessandro Bonanno & Rigoberto A. Lopez, 2008. "Wal-Mart’s Monopsony Power in Local Labor Markets," Food Marketing Policy Center Research Reports 103, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    2. Bonanno, Alessandro & Lopez, Rigoberto A., 2009. "Is Wal-Mart a Monopsony? Evidence from Local Labor Markets," 2009 Conference, August 16-22, 2009, Beijing, China 51289, International Association of Agricultural Economists.
    3. Hagen Tobias, 2003. "Does Fixed-term Contract Employment Raise Firms’ Adjustment Speed?. Evidence from an Establishment Panel for West Germany / Erhöhen befristete Verträge die Anpassungsgeschwindigkeit von Unternehmen?. ," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(4), pages 403-421, August.
    4. Hagen, Tobias, 2001. "Does fixed-term contract employment raise firms' adjustment-speed? Evidence from an establishment panel for West-Germany," ZEW Discussion Papers 01-57, ZEW - Leibniz Centre for European Economic Research.
    5. Cees Gorter & Frank Bruinsma & Peter Nijkamp, 2001. "A Flow Approach to Industrial Sites, Firm Dynamics and Regional Employment Growth: A Case Study of Amsterdam‐North," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 92(2), pages 119-138, May.

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