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A Q-model of labour demand

Author

Listed:
  • Cristina Barceló

    () (Banco de España)

Abstract

This paper studies the labour demand using a Q model in which labour and capital entail adjustment costs. The estimates are based on an unbalanced panel of Spanish firms over the period 1989-96. The corresponding Q variable for labour is significant in explaining hiring rates. Its estimated coefficient varies across sectors in a way that suggests that the use of temporary labour is more widespread in those economic sectors that incur smaller costs of adjusting labour factor due to the specific characteristics of their technology and economic activity. Interaction effects between investment and labour demands are also observed in their adjustment costs.

Suggested Citation

  • Cristina Barceló, 2006. "A Q-model of labour demand," Working Papers 0626, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:0626
    as

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    References listed on IDEAS

    as
    1. Pindyck, Robert S & Rotemberg, Julio J, 1983. " Dynamic Factor Demands under Rational Expectations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(2), pages 223-238.
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    3. Stephen R. Bond & Jason G. Cummins, 2000. "The Stock Market and Investment in the New Economy: Some Tangible Facts and Intangible Fictions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 61-124.
    4. Blundell, Richard & Bond, Stephen & Devereux, Michael & Schiantarelli, Fabio, 1992. "Investment and Tobin's Q: Evidence from company panel data," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 233-257.
    5. Bentolila, Samuel & Saint-Paul, Gilles, 1992. "The macroeconomic impact of flexible labor contracts, with an application to Spain," European Economic Review, Elsevier, vol. 36(5), pages 1013-1047, June.
    6. M. Concepcion Sanz, 1994. "Una estimación de la demanda de trabajo manual y no manual," Investigaciones Economicas, Fundación SEPI, vol. 18(2), pages 333-364, May.
    7. Jason G. Cummins & Kevin A. Hassett & R. Glenn Hubbard, 1994. "A Reconsideration of Investment Behavior Using Tax Reforms as Natural Experiments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 1-74.
    8. Alonso-Borrego, Cesar & Bentolila, Samuel, 1994. "Investment and Q in Spanish Manufacturing Firms," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(1), pages 49-65, February.
    9. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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    11. Ángel Estrada & Javier Vallés, 1998. "Investment and financial structure in Spanish manufacturing firms," Investigaciones Economicas, Fundación SEPI, vol. 22(3), pages 337-359, September.
    12. Alonso-Borrego, Cesar, 1998. "Demand for labour inputs and adjustment costs: evidence from Spanish manufacturing firms," Labour Economics, Elsevier, vol. 5(4), pages 475-497, December.
    13. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    14. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-224, January.
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    More about this item

    Keywords

    q model; adjustment costs; labour demand; panel data;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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