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- Title
Modelling Aggregate Demand for Labour: A Critique of Lewis and MacDonald.
- Authors
DOWRICK, STEVE; WELLS, GRAEME
- Abstract
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.
- Subjects
AUSTRALIA; ECONOMIC demand; LABOR; AUSTRALIAN economy; ECONOMIC models; ELASTICITY (Economics)
- Publication
Economic Record, 2004, Vol 80, Issue 251, p436
- ISSN
0013-0249
- Publication type
Article
- DOI
10.1111/j.1475-4932.2004.00200.x