Employment Changes, the Structure of Adjustment Costs, and Plant Size

Øivind Nilsen, Kjell G Salvanes and Fabio Schiantarelli

No 920, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we analyze the pattern of employment adjustment using a rich panel of Norwegian plants. The data suggest that the frequency of episodes of zero net employment changes is inversely related to plant size. We develop and estimate a simple “q” model of labor demand, allowing for the presence of fixed, linear and convex components of adjustment costs. The econometric evidence supports the existence of purely fixed components, unrelated to plant size. As a result, the range of inaction is wider for smaller plants. The quadratic components of costs are also important. Finally, in most specifications both fixed and convex costs are higher for employment contractions.

Keywords: size; adjustment costs; employment demand (search for similar items in EconPapers)
JEL-codes: C23 D21 E24 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2003-11
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (5)

Published - published in: European Economic Review, 2007, 51 (3), 577-598

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Related works:
Journal Article: Employment changes, the structure of adjustment costs, and plant size (2007)
Working Paper: Employment Changes, the Structure of Adjustment Costs, and Plant Size (2003)
Working Paper: Employment Changes, the Structure of Adjustment Costs, and Plant Size (2003)
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