TY - JOUR AU - Cooper,Russel W. AU - Haltiwanger,John C. AU - Willis,Jonathan TI - Dynamics of Labor Demand: Evidence from Plant-level Observations and Aggregate Implications JF - National Bureau of Economic Research Working Paper Series VL - No. 10297 PY - 2004 Y2 - February 2004 UR - http://www.nber.org/papers/w10297 L1 - http://www.nber.org/papers/w10297.pdf N1 - Author contact info: Russell Cooper Department of Economics The Pennsylvania State University 611 Kern State College, PA 16802 E-Mail: russellcoop@gmail.com John C. Haltiwanger Department of Economics University of Maryland College Park, MD 20742 Tel: 301/405-3504 Fax: 301/405-3542 E-Mail: haltiwan@econ.umd.edu Jonathan Willis Federal Reserve Bank of Kansas City 1 Memorial Drive Kansas City, MO 64198 Tel: 8168812852 Fax: 8168812199 E-Mail: jonathan.willis@kc.frb.org AB - This paper studies the dynamics of labor demand at the plant and aggregate levels. The correlation of hours and employment growth is negative at the plant level and positive in aggregate time series. Further, hours and employment growth are about equally volatile at the plant level while hours growth is much less volatile than employment growth in the aggregate data. Given these differences, 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 moments on hours and employment. Aggregation generates time series implications which are broadly consistent with observation. Further, we find that a model with quadratic adjustment costs alone can also broadly match the aggregate facts. ER -