Identifying Adjustment Costs of Net and Gross Employment Changes
40 Pages Posted: 6 Oct 2008
Abstract
A relatively unexplored question in dynamic labour demand regards the source of adjustment costs, whether they depend on net or gross changes in employment. We estimate a structural model of dynamic labour demand where the firm faces adjustment costs related to gross and net changes in its workforce. We focus on matching quarterly moments of hiring and of net changes in employment from a panel of establishments. The main component of adjustment costs in our panel is quadratic adjustment costs to gross changes in employment. We also estimate that adjustment costs have a large economic cost, roughly cutting the value of our establishments in half.
Keywords: employment, adjustment costs, establishment level data, structural estimation
JEL Classification: C33, C41, E24, J23
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Idiosyncratic Shocks and the Role of Nonconvexities in Plant and Aggregate Investment Dynamics
By Aubhik Khan and Julia K. Thomas
-
Idiosyncratic Shocks and the Role of Nonconvexities in Plant and Aggregate Investment Dynamics
By Aubhik Khan and Julia K. Thomas
-
Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model
By Ruediger Bachmann, Eduardo M. R. A. Engel, ...
-
Lumpy Investment in Dynamic General Equilibrium
By Ruediger Bachmann, Eduardo M. R. A. Engel, ...
-
Investment Spikes: New Facts and a General Equilibrium Exploration
By Francois Gourio and Anil K. Kashyap
-
Investment Spikes: New Facts and a General Equilibrium Exploration
By Francois Gourio and Anil K. Kashyap
-
Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model
By Ruediger Bachmann, Ricardo J. Caballero, ...
-
Partial Adjustment Without Apology
By Robert G. King and Julia K. Thomas