TY  - JOUR
AU  - Hamermesh,Daniel S.
AU  - Pfann,Gerard
TI  - Turnover and the Dynamics of Labor Demand
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4204
PY  - 1992
Y2  - October 1992
UR  - http://www.nber.org/papers/w4204
L1  - http://www.nber.org/papers/w4204.pdf
N1  - Author contact info:
Daniel S. Hamermesh
Department of Economics
University of Texas
Austin, TX 78712-1173
Tel: 512/475-8526
Fax: 512/471-3510
E-Mail: hamermes@eco.utexas.edu

Gerard A.. Pfann
Faculty of Quantitative Economics
Maastricht University
Maastricht, THE NETHERLANDS
E-Mail: g.pfann@maastrichtuniversity.nl
AB  - The theory of the dynamics of labor demand is based either on the costs of adjusting the level of employment or on the costs of hiring or firing (of gross changes in employment). We write down a generalized cost of adjustment function that includes both types of cost and allows for asymmetries in those costs. We derive the firm's rational-expectations profit - maximizing path of employment demand and the Euler equation whose parameters we estimate. Identifying the two types of costs requires complete data on turnover, which were available for the U.S. through 1981. We use these data for manufacturing to demonstrate that both types of adjustment cost figure in the representative firm's profit-maximizing decisions about employment, and that both types of cost are asymmetric (leading here to quicker increases than decreases in employment).
ER  -