Title: Estimation of Dynamic Labor Demand Schedules under Rational Expectations
Abstract:A dynamic linear demand schedule for labor is estimated and tested. The hypothesis of rational expectations and assumptions about the orders of the Markov processes governing technology impose overide...A dynamic linear demand schedule for labor is estimated and tested. The hypothesis of rational expectations and assumptions about the orders of the Markov processes governing technology impose overidentifying restrictions on a vector autoregression for straight-time employment, overtime employment, and the real wage. The model is estimated by the full-information maximum-likelihood method. The model is used as a vehicle for reexamining some of the paradoxical cyclical behavior of real wages described in the famous Dunlop-Tarshis-Keynes exchange.Read More