NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Cost of Labor Adjustment: Inferences from the Gap

Russell W. Cooper, Jonathan Willis

NBER Working Paper No. 10006
Issued in October 2003
NBER Program(s):   EFG   LS

We study labor adjustment costs. We specify a dynamic optimization problem at the plant-level, allowing for both convex and non-convex adjustment costs. We estimate the parameters of the adjustment process using an indirect inference procedure in which simulated moments are matched with data moments. For this study we use estimates of reduced-form adjustment functions obtained by the gap methodology' reported in Caballero-Engel as data moments. Contrary to evidence at the micro level in support of non-convex adjustment costs, our findings indicate that piecewise quadratic adjustment costs are sufficient to match these aggregate moments.

download in pdf format
   (568 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10006

Published: Cooper, Russell W. and Jonathan L. Willis. "The Cost of Labor Adjustment: Inferences from the Gap." Review of Economic Dynamics 12, 4 (October 2009): 632-647 . citation courtesy of

Users who downloaded this paper also downloaded* these:
Cooper, Haltiwanger, and Willis w10297 Dynamics of Labor Demand: Evidence from Plant-level Observations and Aggregate Implications
Cooper and Willis w8527 The Economics of Labor Adjustment: Mind the Gap
Hamermesh w4394 Labor Demand and the Source of Adjustment Costs
Greenwald, Stiglitz, and Weiss w1335 Informational Imperfections in the Capital Market and Macro-Economic Fluctuations
Cooper, Gong, and Yan w16498 Dynamic Labor Demand in China: Public and Private Objectives
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us