Autore: Rota, Paola
Titolo: Can we represent firms' employment decisions by (S,s) rules
Periodico: International Center for Economics Research, Torino. ICER - Working papers series
Anno: 1999 - Fascicolo: 6 - Pagina iniziale: 1 - Pagina finale: 40

In this paper we analyze the conditions under which an (S,s) rule may be derived and compare these with alternative rules. We consider the case of labour demand in the presence of fixed, possibly asymmetric, adjustment costs. The (S,s) rule implies a specific ordering of chices: downward adjustment, non-adjustemnt and upward adjustment (or upward adjustment, non-adjustment and downward adjustmeent) with the decision of inaction lying crucially in the middle. We find that we may model frim's decisions as an (S,s) rule only if it is possible to characterize unobserved heterogeneity as a perfect negative relation between the error terms specific to the choice of adjusting up (relative to non adjusting) and of adjusting down (relative to non adjusting). Assuming that the choice-specific error terms are normally distribued, the particular ordering of choices implied by the (S,s) rule may be estimated by an ordered probit. We test the (S,s) rule nesting the ordered probit within a multinational model with correlated error terms.We find that our data do not support the ordering of choices consistent with the (S,s) rule.




Testo completo: http://www.icer.it/menu/f_papers.html

Esportazione dati in Refworks (solo per utenti abilitati)