Faculty of Economics and Business Administration Publications Database

Labor Utilization and Nonwage Labor Costs in a Disequilibrium Macro Framework

Authors:
König, Heinz
Pohlmeier, Winfried
Source:
Volume: 94
Number: 1
Pages: 71 - 83
Year: 1992
Keywords: Equilibrium; Econometric models; Labor costs
Abstract:

The literature on labor utilization and nonwage labor costs is extended to incorporate recent approaches to macroeconomic disequilibrium modeling based on the "smoothing by aggregation" principle. This leads to a reformulation of the basic Sneessens-Drèze type model by treating employment and working hours as separate inputs. The inclusion of nonwage labor costs serves a double purpose: first, they represent a restriction in the profit maximizing process and, second, they serve as a proxy for the fixity of labor. The results differ substantially from simulation studies that disregard the utilization of labor and the nonlinear structure of labor costs.

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