Elasticidad de la demanda de trabajo en Uruguay : 1986-2005

The elasticity parameters of labour demand for the whole economy are important for macroeconomic analyses. In particular, the parameters reflecting the change of labour demand with respect to labour costs and product are relevant information for policy makers. However, there are only a few estimates of that parameter for Uruguay. Thus, the objective of this research is to estimate the long-run elasticities of labour demand with respect to labour cost, cost of the use of capital and product for the period 1986-2005, distinguishing between categories of employees. The elasticities were estimated using Johansen cointegration analysis and the vector error correction model (VECM). The results indicate that in Uruguay the aggregate labour demand is relatively inelastic with respect to changes in labour cost and more elastic when the universe is bounded to private dependent work. Regarding to the product side, the elasticity is close to one for the private sector and slightly less including the public sector. We do not reject the hypothesis of homogeneity, so the response of labour demand to change in capital costseems to be of the same magnitude as the response to change in labour cost, but with opposite sign.