Identifying adjustment costs of net and gross employment changes
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Date
2008-09Metadata
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- Discussion papers (SAM) [667]
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.
Publisher
Norwegian School of Economics and Business Administration. Department of EconomicsSeries
Discussion paper2008:19