Interrelated Demand Rational Expectations Models for Two Types of Labour

Palm, Franz C.;Pfann, Gerard A.
(1989) , 35 pages

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Authors
  • Palm, Franz C.University of Limburg
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  • Pfann, Gerard A.UCLouvain
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Abstract
In this paper we derive and estimate optimal dynamic interrelated labour demand curves for Dutch manufacturing blue and white collar labour. The driving forces of the labour demand model are the predetermined capital stock and the real wage costs of the two types of labour. Interrelation between the demand for two types of labour results only from the presence of serial correlation between the exogenous shocks of the forcing variables. It is found to be optimal for the firm to raise the number of white collar workers employed when increasing its blue collar workforce. On the other hand, a single upswing in white collar employment has a displacement effect on the blue collar workers.
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Palm, F. C., & Pfann, G. A. (1989). Interrelated Demand Rational Expectations Models for Two Types of Labour (Working Papers Institut des sciences économiques 8916). https://hdl.handle.net/2078.5/281062