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Journal for Labour Market Research

Table 4 Estimation of the basic model of dynamic labor demand with fix and convex adjustment costs and an asymmetric cost structurea (only private plants which adjust their level of employment; 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

0.7877***

0.0457

0.7493***

0.0582

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

0.0629***

0.0090

−0.0744***

0.0158

Turnover (log)

−0.0052

0.0190

0.0186

0.0393

Nom. wage bill per employee (log)

−0.0912***

0.0172

−0.1032***

0.0250

Share of female employees (in percent)

0.0002

0.0006

−0.0003

0.0010

Share of qualified employees (in percent)

−0.0016***

0.0003

−0.0015***

0.0005

Share of part-time employees (in percent)

0.0008*

0.0004

0.0013**

0.0006

Share of fixed-term employees (in percent)

0.0001

0.0008

0.0007

0.0008

Share of employees covered by social security (in percent)

0.0162***

0.0010

0.0194***

0.0021

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

0.0195***

0.0053

0.0411***

0.0098

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

0.0116**

0.0057

0.0276**

0.0140

Works council ‡(dummy: yes = 1)

−0.0155

0.0174

−0.0153

0.0280

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

−0.0053

0.0110

−0.0070

0.0129

Firm expects turnover increase (dummy: yes = 1)

0.0042

0.0051

0.0195*

0.0107

Firm expects turnover reduction (dummy: yes = 1)

−0.0341***

0.0049

−0.0494***

0.0098

Constant

0.2033

0.4267

−0.9315*

0.4873

Industry dummies

yes

 

yes

 

Year dummies

yes***

 

yes

 

Selection term

yes***

 

yes**

 

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

yes***

 

yes***

 

Number of observations (plant-years)

28824

 

17577

 

Wald (73/70)

4280.76***

 

9928.60***

 

Hansen (103/100)

380.1639***

 

422.321***

 

Arellano-Bond (m1 | m2)

−5.91***

0.45

−6.80***

1.13

Theil U

0.0794

 

0.0841

 
  1. aThe table presents coefficients and standard errors that are calculated from a bootstrapping with 150 replications. Reference categories of the dummy variable groups: no turnover change expected, agriculture and forestry, 1996 and 1997 (Eastern Germany: additional 1998 and 1999). 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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