The Short-Run Demand for Workers and Hours: A Recursive Model

Citation

Hart RA & Sharot T (1978) The Short-Run Demand for Workers and Hours: A Recursive Model. Review of Economic Studies, 445 (2), pp. 299-309. https://doi.org/10.2307/2297345

Abstract
First paragraph: The short-run relationship between employment and output has generated a wealth of literature since the early 1960's (Hultgren (1960, 1965), Kuh (1960, 1965a, 1965b), Neild (1963), Raines (1963), Wilson and Eckstein (1964), Brechling (1965), Ball and St Cyr (1966), Soligo (1966), Brechling and O'Brien (1967), Dhrymes (1967), Ireland and Smyth (1967, 1970), Masters (1967), Smyth and Ireland (1967), Fair (1969), Nadiri and Rosen (1969, 1973). A substantial part of this work has involved the construction and estimation of employment equations the composition of which is derived primarily from an (inverted) short-run production function. The choice of statistical surrogate for employment has strong implications for the structure of the estimating equations and yet, remarkably, relatively little attention has been paid to this aspect of the problem. In most of the studies employment has been approximated either by the number of men in employment or by man-hours. Both formulations assume implicitly that men and average hours are perfect substitutes for one another; that is they are functionally related to the same set ofexogenous variables, adjust at an equal rate to their own lagged values and exhibit similar reactions over the cycle to each and every influence.

Journal
Review of Economic Studies: Volume 445, Issue 2