Abstract
This paper presents estimates of a multivariate flexible accelerator model of labor demand (hours and the number of production workers) which shows that stocks of finished goods, unfilled orders and materials inventories have significant impacts upon labor demand. Univariate time series models are used to capture expectations of the determinants of desired stocks (new orders, real wages and real raw materials prices) and these magnitudes are found to follow a random walk without drift. Expected new orders and errors in forecasting new orders are found to have an important impact upon labor inputs. Real wage forecasting errors are found to be important for hours demand.
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