Endogenous Output in an Aggregate Model of the Labor Market

21 Pages Posted: 4 Jan 2007 Last revised: 16 Sep 2010

See all articles by Richard Quandt

Richard Quandt

Princeton University; Andrew W. Mellon Foundation

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 1989

Abstract

A common feature to most aggregative studies of the labor market is a marginal productivity expression in which the quantity of labor appears on the left hand side of the equation, and the right hand side includes the real wage and output. A number of researchers have cautioned that if the output variable is treated as exogenous, serious econometric difficulties may result. However, the assumption that output is exogenous has not been tested. In this paper, we estimate an equilibrium model of the labor market, and use it to test the assumption of output exogeneity. We find that the assumption that output is exogenous cannot be rejected by the data.

Suggested Citation

Quandt, Richard E. and Rosen, Harvey S., Endogenous Output in an Aggregate Model of the Labor Market (1989). NBER Working Paper No. t0074, Available at SSRN: https://ssrn.com/abstract=579756

Richard E. Quandt (Contact Author)

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Andrew W. Mellon Foundation

140 East 62nd Street
New York, NY 10021
United States

Harvey S. Rosen

Princeton University - Department of Economics ( email )

001 Fisher Hall
Princeton, NJ 08544
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
23
Abstract Views
403
PlumX Metrics