Evaluating reported determinants of labour demand

Abstract There are only few microeconometric studies of labor demand. A promising data source is provided by business surveys which contain information on employment plans and their relevant determinants (e.g., lack of demand, wage and non-wage labor costs, technical progress) as evaluated by the firms themselves. This study investigates the relevance of these determinants, taking into account that most of the explanatory variables are categorical. Results indicate that lack of demand is the most important factor explaining labor demand. This finding is remarkably robust to efforts to account for export market integration and disequilibrium regimes.