Labor adjustment costs in a panel of establishments
Subtitle: a structural approach
By: by Joao Ejarque, Pedro Portugal
Contributors: Portugal, Pedro
Series: Discussion paper -- no. 3091; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 3091
Publisher: IZA
Published: 2007
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] :
Subjects: Labor market; Employment (Economic theory); Unemployment
Description: "This paper estimates a structural model of the employment decision of the firm. Our establishment level data displays an extreme degree of rigidity in that employment levels are largely constant throughout our sample. This can be due to the fact that establishments face large shocks but also large adjustment costs, or alternatively that they incur no adjustment costs but that shocks are negligible. Given our identifying assumptions, we find that rigidity is due to adjustment costs and not to the shock process. We further find that these costs reduce the value of the firm as much as 5%. Finally, small fixed costs of adjustment have a large impact on entry and exit job flows"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 10/10/2007.

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