Modelling labour demand in Poland

Abstract

The aim of the paper is to construct a long-term model of labour demand in Poland, in which the explanatory variables are the average gross salary and gross value added. Additionally, the authors attempt to detect labour hoarding. The study adopted the production approach, which used autoregressive distributed lag model with an ARDL-ECM error correction mechanism. The model parametres were estimated on the basis of quarterly data on the average number of persons employed, the average monthly gross salary and gross value added, all of which related to the period from the first quarter of 2002 to the fourth quarter of 2018. The data used in the study came from Statistics Poland publications. The proposed approach estimated the actual demand for labour. In the analysed period, a long-term relationship between the average employment, the average monthly gross salary and gross value added was observed. Employment was decreasing as the average salary was growing, and its increase was connected with the production growth. Moreover, short-term deviations of the value of the actual employment from the value of employment estimated by the model were observed on the labour market, which indicates labour hoarding could have been taking place. However, due to an insufficient number of observations, the occurrence of this phenomenon could not be fully confirmed.