The Demand for Labour and the Lucas Critique. Evidence from Norwegian Manufacturing

Arbeitspapier

This paper uses neoclassical theory as a foundation for modelling labour demand in Norwegian manufacturing. Applying the Johansen (1988,1991) methodology, we obtain a single cointegrating vector between employment, production, relative factor prices, total factor productivity and the stock of real capital. Normalised on employment, the estimated long run elasticities are 1.37 (production), -0.32 (relative factor prices), -0.57 (total factor productivity) and -1.00 (the stock of real capital). Next, we develop a conditional labour demand model that exhibits parameter constancy. In addition to equilibrium correction effects, we find contemporaneous effects of production and relative factor prices. We cannot reject super exogeneity to be present in our labour demand equation. Hence, the evidence on labour demand in Norwegian manufacturing does not lend support to the Lucas critique.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 256

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models ; General Aggregative Models: Neoclassical ; Labor Demand
• Subject: Labour demand ; cointegration ; conditioning ; equilibrium correction model ; parameter constancy ; exogeneity ; Lucas critique.

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Boug, Pål
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 1999

Further information

• Handle: http://hdl.handle.net/10419/192238
• Last update: 10.03.2025, 11:44 AM CET