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Journal for Labour Market Research

Table 3 Estimation of the basic model of dynamic labor demand with convex adjustment costs and an asymmetric cost structurea (only private sector; 1996–2010; two-step GMM-SYS estimator; dependent variable is log number of employees covered by social security)

From: Employment adjustment in German firmsBetriebliche Beschäftigungsanpassung in Deutschland

Explanatory variables

Western Germany

Eastern Germany

coeff.

std.error

coeff.

std.error

Lagged employment l t−1

0.7280***

0.0225

0.7535***

0.0197

l t−1 ×dummy(1=L increased between t−1 and t)

−0.0747***

0.0054

−0.0793***

0.0075

Turnover (log)

0.0108

0.0090

0.0059

0.0116

Nom. wage bill per employee (log)

−0.0535***

0.0071

−0.0606***

0.0098

Share of female employees (in percent)

0.0001

0.0002

−0.0001

0.0003

Share of qualified employees (in percent)

−0.0009***

0.0001

−0.0010***

0.0002

Share of part-time employees (in percent)

0.0005***

0.0001

0.0008***

0.0002

Share of fixed-term employees (in percent)

0.0001

0.0004

0.0001

0.0004

Share of employees covered by social security (in percent)

0.0125***

0.0004

0.0155***

0.0006

Profit situation ‡(dummy: very good/good = 1)

0.0200***

0.0030

0.0252***

0.0042

Modern production technology (dummy: 1 or 2 on 5-point scale = 1)

0.0069*

0.0036

0.0147***

0.0053

Works council ‡(dummy: yes = 1)

−0.0131

0.0102

−0.0145

0.0131

Covered by collective agreement ‡(dummy: yes = 1)

−0.0011

0.0050

−0.0003

0.0058

Firm expects turnover increase (dummy: yes = 1)

−0.0006

0.0030

0.0020

0.0047

Firm expects turnover reduction (dummy: yes = 1)

−0.0377***

0.0032

−0.0539***

0.0043

Constant

0.0850

0.1337

−0.4445***

0.1592

Industry dummies

yes

 

yes

 

Year dummies

yes***

 

yes***

 

Other interactions with dummy(1=L increased between t−1 and t)

yes***

 

yes***

 

Number of observations (plant-years)

49423

 

30317

 

Wald (74/73)

8571.57***

 

10220.42***

 

Hansen (103/101)

109.3018

 

162.172***

 

Arellano-Bond (m1 | m2)

−10.94***

−0.03

−10.35***

0.76

Theil U

0.1080

 

0.0873

 
  1. aThe table presents coefficients and Windmeijer-corrected standard errors. Reference categories of the dummy variable groups: no turnover change expected, agriculture and forestry, 1996 and 1997 (Eastern Germany: additional 1998). Significance levels: ∗ p<0.1; ∗∗ p<0.05; ∗∗∗ p<0.01. In order to avoid a correlation with the error term, I use l t−2 instead of l t−1 for the interaction. The model for Eastern Germany is estimated with two lags to get an Arellano-Bond-Test which does not indicate second-order serial correlation in the first-differenced residuals. Arellano-Bond (m1 | m2) are tests for first- and second-order serial correlation in the first differenced residuals. For the Theil U statistics the years 2008 to 2010 are predicted based on an estimation of the years 1996 to 2007. ‡Indicates that the information refers to the previous year
  2. Source: IAB Establishment Panel, waves 1996–2010
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