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Modelling Aggregate Demand for Labour - A Critique of Lewis and MacDonald


Wells, GM and Dowrick, S, Modelling Aggregate Demand for Labour - A Critique of Lewis and MacDonald, Economic Record, 80, (251) pp. 436-440. ISSN 1475-4932 (2004) [Refereed Article]

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DOI: doi:10.1111/j.1475-4932.2004.00200.x


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.

Item Details

Item Type:Refereed Article
Research Division:Economics
Research Group:Applied economics
Research Field:Labour economics
Objective Division:Economic Framework
Objective Group:Other economic framework
Objective Field:Other economic framework not elsewhere classified
UTAS Author:Wells, GM (Associate Professor Graeme Wells)
ID Code:44750
Year Published:2004
Web of Science® Times Cited:8
Deposited By:Economics and Finance
Deposited On:2007-06-18
Last Modified:2010-06-18

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