Structure Of Adjustment Costs Research Articles

Dinâmica do emprego e custos de ajustamento na indústria do Rio Grande do Sul

O presente estudo tem como propósito fazer uma análise empírica da estrutura dos custos de ajustamento do emprego industrial usando dados do Brasil. As estruturas teóricas para custos de ajustamento do emprego encontradas na literatura podem ser agrupadas em custos convexos (que incluem a popular função quadrática) e não-convexos (como custos fixos). Seguindo o trabalho de Varejão e Portugal (2007), empregamos metodologias complementares para a identificação da estrutura de custos de ajustamento de modo inovador no Brasil. Primeiro, usando matrizes de transição entre regimes de emprego. Segundo, empregando modelos de sobrevivência, que são mais gerais que os modelos de matriz de transição Markoviana. Os resultados obtidos sugerem que os custos de ajustamento não-convexos têm mais apoio nos dados do que o modelo usual de custos de ajustamentos quadráticos.

Employment changes, the structure of adjustment costs, and plant size

In this paper, we analyze the pattern of employment adjustment using a rich panel of Norwegian plants. The data suggest that the frequency of episodes of zero net employment changes is inversely related to plant size. We develop and estimate a simple “ q” model of labor demand, allowing for the presence of fixed, linear and quadratic components of adjustment costs. The econometric evidence supports the existence of purely fixed components, unrelated to plant size. As a result, the range of inaction is wider for smaller plants. The quadratic component of costs is also always important. In most specifications fixed costs are higher for employment contractions. The quadratic component is higher during employment contractions compared to expansions for small plants, while this is not true for larger plants.

A Comment on the Economics of Labor Adjustment: Mind the Gap: Rejoinder

Numerous papers in this literature have used these questions as motivation. Understanding the structure of labor adjustment costs is relevant any time a policy or forecasting question requires input on the properties of labor dynamics. Of course, for some policy questions, we are interested in the aggregate effects of policies. Hence understanding whether nonconvexities have implications for aggregate labor demand is crucial as well. In terms of the ongoing discussion over these questions, there seems to be agreement that the simple quadratic adjustment cost model is not an adequate representation of the costs plants face in adjusting the number of workers. From data displayed by Daniel Hamermesh (1989) and Caballero et al. (1997), hereafter CEH, one is certainly struck by both the inactivity of labor adjustment and the bursts of job creation and destruction at the plant level. That said, while these observations serve as evidence against a model which contains only quadratic adjustment costs, they do not directly identify a particular structure of adjustment costs at the plant level. Inspection of the adjustment patterns reported in CEH, though cast in terms of gaps, does provide some evidence of partial adjustment and thus suggests the presence of both convex and nonconvex adjustment costs. Further, Caballero and Engel (1993), hereafter CE, and CEH appear to have provided useful evidence on the second question: the nonlinearities they uncover in aggregated data suggest that nonconvexities at the plant level have aggregate implications.

Employment Changes, the Structure of Adjustment Costs, and Plant Size

In this paper we analyze the pattern of employment adjustment using a rich panel of Norwegian plants. The data suggest that the frequency of episodes of zero net employment changes is inversely related to plant size. We develop and estimate a simple q model of labor demand, allowing for the presence of fixed, linear and convex components of adjustment costs. The econometric evidence supports the existence of purely fixed components, unrelated to plant size. As a result, the range of inaction is wider for smaller plants. The quadratic components of costs are also important. Finally, in most specifications both fixed and convex costs are higher for employment contractions.

Solving labor demand models under asymmetric adjustment costs

This paper provides a closed-form solution for a labor demand model under asymmetric adjustment costs. The gross hirings decision rule is a non-linear increasing function of the marginal value of employment, either concave or convex, depending on the structure of adjustment costs. Moreover, the model exhibits skewed distribution of gross hirings. The findings are useful in allowing for comparisons among approximation methods in computational economics and among estimation methods in econometrics. This non-linear model allows to investigate the complicated effects of shocks and economic policy on the labor market dynamics.

Labor Demand and the Structure of Adjustment Costs in Japan

Recent work by Hamermesh (1989,Amer. Econ. Rev.79,674–689) has emphasized that it is wrong to assume that employers at the plant level adjust continuously in response to demand shocks. Using data provided by a Japanese company we examine the nature of adjustment costs at different levels of aggregation in Japan. We find that for Japanese manufacturing, the assumption of continuous adjustment is valid for both plants and when aggregating to the company level. What is important to understand labor demand in Japan are figures on the short-term adjustment of employees. It is these figures that are missing from aggregate figures provided in company reports and by national agencies.J. Japan. Int. Econ.,June 1998,12(2), pp. 131–150. Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, United Kingdom and Department of Economics, University of California—Berkeley, 549 Evans Hall #3880, Berkeley, California 94720-3880; and Institute of Social and Economic Research, Osaka University, 6-1 Mihogaoka, Ibaraki, Osaka 567, Japan.Copyright 1998 Academic Press.Journal of Economic LiteratureClassification Numbers J23 and D23.

Are Adjustment Costs for Labor Asymmetric? An Econometric Test on Panel Data for Italy

In this paper we analyze the structure of adjustment costs for labor. In particular, the question whether hiring and firing costs are asymmetric is addressed. We maintain the standard assumption of quadratic adjustment costs, but allow the multiplicative coefficient to differ for the firing and hiring regime. The Euler equations for this problem can be combined into a general model that nests the one with symmetric adjustment costs. The model can be conveniently estimated and the parameter restrictions implied by symmetry easily tested. We also extend the model to allow for variable adjustment coefficients. In the empirical application we use a panel data collected by Ceris on 52 large Italian firms for the period 1958-1988. The general conclusion from the econometric testing is that the hypothesis of symmetric adjustment costs is rejected by the data. Copyright 1993 by MIT Press.

The structure of adjustment costs for labour in the Dutch manufacturing sector

This paper investigates the appropriateness of the hypothesis of symmetric adjustment costs for labour (ACL) in dynamic labour demand models.