NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Costs of Hiring and Separations

John M. Abowd, Francis Kramarz

NBER Working Paper No. 6110
Issued in July 1997
NBER Program(s):   LS

In this article, we estimate the costs of hiring, separation, and retirement of employees for a representative sample of French establishments in 1992. The estimates are computed using data from three sources: the Wage Structure Survey (ESS), the Workforce Movement Questionnaire (DMMO), and the Occupational Structure Survey (ESE). We show that the estimated costs are generally asymmetric (hiring is cheaper than terminations), increasing, and concave functions of the number of entries or exits (either retirements or terminations). There is a fixed component to each of these costs that is related to the structure of the firm's personnel department. Our estimates imply that firms should not adjust gradually to the desired level of employment.

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Document Object Identifier (DOI): 10.3386/w6110

Published: Abowd, John M. & Kramarz, Francis, 2003. "The costs of hiring and separations," Labour Economics, Elsevier, vol. 10(5), pages 499-530, October.

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