Input Demand and the Short- And Long-Run Employment Thresholds An Empirical Analysis for the German Manufacturing Sector

19 Pages Posted: 4 Apr 2001  

Gebhard Flaig

CESifo (Center for Economic Studies and Ifo Institute); University of Munich

Horst Rottmann

University of Applied Sciences Amberg-Weiden; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2000

Abstract

The concept of the "employment thresholdin the public discussion of unemployment. The employment threshold is defined as that growth rate of output which is necessary to keep employment constant despite the continuous rise in labour productivity. It is related to the Okun coefficient which describes the relationship between the changes of output and unemployment. Many contributions to this debate give the impression that the employment threshold is more or less a structural characteristic which remains constant over time. In this paper we derive short- and long-run employment thresholds from an input demand system and show empirically that they depend on factor prices. A moderate wage policy leads to a reduction of the output growth which is necessary for an increase in employment.

JEL Classification: D24, E24, L60

Suggested Citation

Flaig, Gebhard and Rottmann, Horst, Input Demand and the Short- And Long-Run Employment Thresholds An Empirical Analysis for the German Manufacturing Sector (March 2000). CESifo Working Paper Series No. 264. Available at SSRN: https://ssrn.com/abstract=263947

Gebhard Flaig (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

University of Munich

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

Horst Rottmann

University of Applied Sciences Amberg-Weiden ( email )

Hetzenrichter Weg 15
D-92637 Weiden i.d. Opf
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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