TY - JOUR AU - Eslava,Marcela AU - Haltiwanger,John AU - Kugler,Adriana AU - Kugler,Maurice TI - Factor Adjustments After Deregulation: Panel Evidence from Colombian Plants JF - National Bureau of Economic Research Working Paper Series VL - No. 11656 PY - 2005 Y2 - October 2005 UR - http://www.nber.org/papers/w11656 L1 - http://www.nber.org/papers/w11656.pdf N1 - Author contact info: Marcela Eslava Universidad de Los Andes Carrera 1 Este No 18 A -70. Bloque C Bogota, Colombia Tel: 571-339-4949 Fax: 571-332-4492 E-Mail: meslava@uniandes.edu.co 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 Adriana D. Kugler Georgetown University Georgetown Public Policy Institute 37th and O Streets NW, Suite 311 Washington, DC 20057 Tel: 202/687-5716 Fax: 202/687-5544 E-Mail: ak659@georgetown.edu Maurice Kugler JFK School of Government Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617/496-0897 Fax: 617/496-8753 E-Mail: maurice.kugler@gmail.com M2 - featured in NBER digest on 2005-10-03 AB - We analyze employment and capital adjustments using plant data from the Colombian Annual Manufacturing Survey. We estimate adjustment functions for capital and labor as a non-linear function of the gaps between desired and actual factor levels, allowing for interdependence in adjustments of the two factors. In addition to non-linear employment and capital adjustments in response to market fundamentals, we find that capital shortages reduce hiring and labor surpluses reduce capital shedding. We also find that after factor market deregulation in Colombia in 1991, factor adjustment hazards increased on the job destruction and capital formation margins. Finally, we find that completely eliminating frictions in factor adjustment would yield a substantial increase in aggregate productivity through improved allocative efficiency. Yet, the actual impact of the Colombian deregulation on aggregate productivity through factor adjustment was modest. ER -