Dynamics of labor demand: Evidence from plant-level observations and aggregate implications. Issue 1 (March 2015)

• Record Type: Journal Article
• Authors: Cooper, Russell; Haltiwanger, John; Willis, Jonathan L.
• Is Part Of: Research in economics. Volume 69:Issue 1(2015)
• Page Start: 37
• Page End: 50
• Publication Date: 2015-03
• Subjects: Labor dynamics -- Adjustment costs -- Firm-level data; Economics -- Periodicals; Économie politique -- Périodiques; 330.05
• DOI: 10.1016/j.rie.2015.01.002
• Languages: English
• ISSNs: 1090-9443

Abstract

Abstract: This paper studies the dynamics of labor demand at the plant level to quantify labor adjustment costs. At the plant level, in contrast to time-series observations, the correlation of hours and employment growth is negative while hours and employment growth are about equally volatile. We specify and estimate the parameters of a plant-level dynamic optimization problem using simulated method of moments to match these plant-level observations. Our findings indicate that non-convex adjustment costs are critical for explaining plant-level observations on hours and employment adjustment. Abstract : Highlights: This paper studies the dynamics of labor demand at the plant level to quantify labor adjustment costs. We specify and estimate the parameters of a plant-level dynamic optimization problem using simulated method of moments to match plant-level observations. Our findings indicate that non-convex adjustment costs are critical for explaining plant-level observations on hours and employment.