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Real wages, investment and employment: New evidence from West German sectoral data

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Abstract

Real Wages, Investment and Employment: New Evidence from West German Sectoral Data. — Non-separable capital adjustment costs imply that investment directly affects the demand for labour and therefore justify not only the lagged dependent variable but also the presence of investment expenditures or Tobin’s valuation ratio Q in labour demand estimation. On this basis, the authors estimate a very parsimonious specification of demand for blue-collar workers in a panel of 32 West German industries. They find much larger short-run real wage employment elasticities than previous research, and robustly significant positive effects of investment or Tobin’s Q on labour demand.

Zusammenfassung

Reallöhne, Investitionen und Beschäftigung. Neue empirische Ergebnisse auf der Basis von disaggregierten Daten für die Wirtschaftszweige des Verarbeitenden Gewerbes in der Bundesrepublik Deutschland. — Die Existenz einer nicht separierbaren Anpassungskostenfunktion impliziert, daß die Investitionstätigkeit die Arbeitsnachfrage direkt beeinflußt und daß es deshalb gerechtfertigt ist, die Investitionsausgaben oder Tobin's Q als zusätzliche erklärende Variable bei der Schätzung von Arbeitsnachfragefunktionen zu verwenden. Die Schätzungen auf der Basis eines Modells anhand von Daten für 32 westdeutsche Industriezweige ergaben kurzfristige Reallohnelastizitäten, die deutlich höher sind als die aus früheren Forschungen. Außerdem ergaben sich signifikant positive Effekte der Investitionstätigkeit bzw. Tobin's Q auf die Arbeitsnachfrage.

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FitzRoy, F., Funke, M. Real wages, investment and employment: New evidence from West German sectoral data. Weltwirtschaftliches Archiv 130, 258–272 (1994). https://doi.org/10.1007/BF02707709

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