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Leverage as a Conditioning Variable for Employment: An Analysis of a Panel of West German Manufacturing Firms


  • Michael Funke


  • Holger Strulik



This paper reports an attempt to implement financial factors into a neoclassical model of optimal factor demand. The theoretical shows that factor demand decisions of firms operating under monopolistic competition or with decreasing returns to scale are affected by financial restrictions. The theoretical model is estimated using West German firm data from 1987 to 1994.

Suggested Citation

  • Michael Funke & Holger Strulik, 1998. "Leverage as a Conditioning Variable for Employment: An Analysis of a Panel of West German Manufacturing Firms," Quantitative Macroeconomics Working Papers 19804, Hamburg University, Department of Economics.
  • Handle: RePEc:ham:qmwops:19804

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    Financial Restrictions; Labour Demand; Panel Data;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models


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