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Modelling Aggregate Demand for Labour - A Critique of Lewis and MacDonald
In a recent contribution to this journal, Lewis and MacDonald (2002) argue that Australian literature on aggregate demand for labour is permeated with misunderstandings and, as a result, existing empirical work has been misinterpreted. The objective of the present note is to argue that the interpretation of existing empirical studies, to the extent that they are based on a CES production technology, is broadly correct. We demonstrate that Lewis and McDonald have no basis for estimating anything more than the partial elasticity of labour demand, holding output constant, because their single-equation estimation does not identify the elasticity of demand for output.
History
Publication title
Economic RecordVolume
80Issue
251Pagination
436-440ISSN
1475-4932Department/School
TSBEPublisher
Blackwell Publishing Asia Pty LtdPlace of publication
Carlton VictoriaRights statement
The definitive published version is available online at: http://interscience.wiley.comRepository Status
- Restricted