A Q-Model of Labour Demand

53 Pages Posted: 7 Oct 2006

Date Written: Ocrober 6, 2006


This paper studies the labour demand using a Q model in which labour and capital entail adjustment costs. The estimates are based on an unbalanced panel of Spanish firms over the period 1989-96. The corresponding Q variable for labour is significant in explaining hiring rates. Its estimated coefficient varies across sectors in a way that suggests that the use of temporary labour is more widespread in those economic sectors that incur smaller costs of adjusting labour factor due to the specific characteristics of their technology and economic activity. Interaction effects between investment and labour demands are also observed in their adjustment costs.

Keywords: Q model, adjustment costs, labour demand, panel data

JEL Classification: J23, J32, E22

Suggested Citation

Barcelo, Cristina, A Q-Model of Labour Demand (Ocrober 6, 2006). Banco de Espana Research Paper No. WP-0626, Available at SSRN: https://ssrn.com/abstract=935224 or http://dx.doi.org/10.2139/ssrn.935224

Cristina Barcelo (Contact Author)

Banco de España ( email )

Servicio de Estudios
Alcala, 48
Madrid, Madrid 28014
+34 91338 5887 (Phone)
+34 91 338 5678 (Fax)

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