Tests of Various Hypotheses regarding the Short-run Demand for Production Workers

Eq. (3.9)‘, which was developed in ch. 3 and estimated in ch. 4, appears to be an adequate specification of the short-run demand for production wdrkers. Both the amount of excess labor on hand and the time stream of expected future output changes appear to be significant factors in the determination of a firm’s demand for production workers. In table 4.3 the results of estimating eq. (3.9)’ for each of the seventeen industries under the best expectational hypothesis for that industry were presented. In this chapter various hypotheses regarding other possible determinants of the short-run demand for production workers are discussed, and using the estimates in table 4.3 as a base of reference, these hypotheses are tested. As was the case for the tests of the expectational hypotheses in ch. 4, the validity of these tests depends on the assumption that eq. (3.9)’ is an adequate specification of the short-run demand for production workers to begin with.