The Costs of Hiring and Separations

35 Pages Posted: 24 Apr 1998 Last revised: 19 May 2023

See all articles by John M. Abowd

John M. Abowd

Cornell University Department of Economics; Labor Dynamics Institute; Cornell University - School of Industrial and Labor Relations; National Bureau of Economic Research (NBER); CREST; IZA Institute of Labor Economics

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Date Written: July 1997

Abstract

In this article, we estimate the costs of hiring, separation, and retirement of employees for a representative sample of French establishments in 1992. The estimates are computed using data from three sources: the Wage Structure Survey (ESS), the Workforce Movement Questionnaire (DMMO), and the Occupational Structure Survey (ESE). We show that the estimated costs are generally asymmetric (hiring is cheaper than terminations), increasing, and concave functions of the number of entries or exits (either retirements or terminations). There is a fixed component to each of these costs that is related to the structure of the firm's personnel department. Our estimates imply that firms should not adjust gradually to the desired level of employment.

Suggested Citation

Abowd, John and Kramarz, Francis, The Costs of Hiring and Separations (July 1997). NBER Working Paper No. w6110, Available at SSRN: https://ssrn.com/abstract=62688

John Abowd (Contact Author)

Cornell University Department of Economics ( email )

Ithaca, NY 14853-3901
United States

HOME PAGE: http://https://blogs.cornell.edu/abowd/

Labor Dynamics Institute ( email )

Ithaca, NY 14853-3901
United States

HOME PAGE: http://www.ilr.cornell.edu/LDI/

Cornell University - School of Industrial and Labor Relations ( email )

Ithaca, NY 14853-3901
United States

HOME PAGE: http://www.ilr.cornell.edu/LDI/

National Bureau of Economic Research (NBER) ( email )

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CREST ( email )

92245 Malakoff Cedex
France

HOME PAGE: http://www.crest.fr/

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

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