Estimation of Labor Demand Elasticity for Industrial Firms: An application of Fractional Panel Probit

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ROOSTAEI SHALMANI KHEIZARAN; MILA ELMI ZAHRA

مرکز اطلاعات علمی Scientific Information Database (SID) - Trusted Source for Research and Academic Resources

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Journal: Iranian Journal of Trade Studies Year:2019 | Volume:23 | Issue:91 Page(s): 1-30

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Title

Estimation of Labor Demand Elasticity for Industrial Firms: An application of Fractional Panel Probit

Author(s)

ROOSTAEI SHALMANI KHEIZARAN | MILA ELMI ZAHRA | Issue Writer Certificate

Keywords

Labor Demand ElasticityQ1

Labor Income ShareQ1

Industrial FirmsQ1

Procinces of IranQ1

Fractional Panel ProbitQ1

Abstract

This paper examines the own and cross price elasticities of the labor force demand for two size firms: 10-49 employees and more than 50 employees. Estimation of elasticities is done in two steps: firstly, the effect of some variable will be regressed on Labor Income Share. In second step, by using of previous estimation, own price and substitution elasticities of the labor will be calculated. In this study, for estimation, the Fractional Panel Probit technique has been employed for the period of time from 2004 to 2014 and at the provincial level. The results of estimation for both groups shows a negative relationship between tax, value of raw material and premium paid with Labor Income Share. There is a positive sign for output-employment elasticity. The results show own price elasticity is negative and cross elasticity of capital price and labor demand reveals a substitution effect in small firms. As Iran’ s labor market is suffering from labor demand shortage and high unemployment, it is suggested that the economic policymaker should eliminate production barriers, care about increasing production capacity and facilitate the supply of raw materials.

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APA: Copy

ROOSTAEI SHALMANI, KHEIZARAN, & MILA ELMI, ZAHRA. (2019). Estimation of Labor Demand Elasticity for Industrial Firms: An application of Fractional Panel Probit. IRANIAN JOURNAL OF TRADE STUDIES (IJTS), 23(91 ), 1-30. SID. https://sid.ir/paper/7333/en

Vancouver: Copy

ROOSTAEI SHALMANI KHEIZARAN, MILA ELMI ZAHRA. Estimation of Labor Demand Elasticity for Industrial Firms: An application of Fractional Panel Probit. IRANIAN JOURNAL OF TRADE STUDIES (IJTS)[Internet]. 2019;23(91 ):1-30. Available from: https://sid.ir/paper/7333/en

IEEE: Copy

KHEIZARAN ROOSTAEI SHALMANI, and ZAHRA MILA ELMI, “Estimation of Labor Demand Elasticity for Industrial Firms: An application of Fractional Panel Probit,” IRANIAN JOURNAL OF TRADE STUDIES (IJTS), vol. 23, no. 91 , pp. 1–30, 2019, [Online]. Available: https://sid.ir/paper/7333/en

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