Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192238 
Authors: 
Year of Publication: 
1999
Series/Report no.: 
Discussion Papers No. 256
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
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.
Subjects: 
Labour demand
cointegration
conditioning
equilibrium correction model
parameter constancy
exogeneity
Lucas critique.
JEL: 
C22
C32
E13
J23
Document Type: 
Working Paper

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