NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Municipal Labor Demand in the Presence of Uncertainty: An Econometric Approach

Douglas Holtz-Eakin, Harvey S. Rosen

NBER Working Paper No. 3516 (Also Reprint No. r1620)
Issued in November 1990
NBER Program(s):Public Economics

We specify a modem of municipal labor demand when resource flows available to the municipality are not known with certainty. The model allows us to test the hypothesis that employment decisions are rational in the sense that they incorporate all available information at the time that the decisions are made. We find that for our sample of communities, on the whole one cannot reject the hypothesis that labor demand is consistent with intertemporal utility maximization under uncertainty. However, small and large communities exhibit different behavior. The employment decisions of small communities are consistent with the model, while those of large communities are not.

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Document Object Identifier (DOI): 10.3386/w3516

Published: Journal of Labor Economics, Vol. 9, No. 3, pp. 276-293, (July 1991). citation courtesy of

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