How Fast Do Banks Adjust? A Dynamic Model of Labor-Use with an Application to Swedish Banks
This paper deals with a dynamic adjustment process in which adjustment of a key variable input (labor) towards its desired level is modeled in a panel data context. The partial adjustment type model is extended to incorporate firm- and time-specific adjustment parameter. A flexible (translog) labor requirement function is used to represent the desired level of labor-use. It is specified as a function of a vector of outputs and other firm-specific variables. Labor-use inefficiency is defined as the ratio of actual to desired level of employment. Productivity growth is defined in terms of a shift in the labor requirement function. Swedish banking data is used as an application of the above model.
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|Date of creation:||08 Nov 2000|
|Date of revision:||Nov 2001|
|Publication status:||Published in Journal of Productivity Analysis, 2002, pages 79-102.|
|Contact details of provider:|| Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden|
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