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Identifying Adjustment Costs of Net and Gross Employment Changes

Ejarque, João Miguel and Nilsen, Øivind Anti (2008) Identifying Adjustment Costs of Net and Gross Employment Changes. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester.


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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.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Employment, adjustment costs, establishment level data, structural estimation
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Users 161 not found.
Date Deposited: 28 Aug 2014 11:13
Last Modified: 28 Aug 2014 11:13

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