Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

The Labour Input response to Permanent Changes in Output: Errors in Variables Econometrics Based on Panel Data.

E. Biorn and T.J. Klette

Abstract: Using panel data for the Norwegian manufacturing, we revisit " the increasing returns to scale puzzle" for labour input. We consider the response of the input of white collar workers, blue collar workers, and blue collar worker hours to permanent changes in output. Permanent and temporary changes in output are treated as latent variables within a GMM estimation procedure.

Keywords: LABOUR MARKET; DEMAND; EVALUATION

JEL-codes: C23; J23; C13

58 pages, 1996

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