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

By Øivind A. Nilsen, Kjell G. Salvanes, F. Schiantarelli. Social Science Research Network, 2003

59 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/ac4589851745b9023b6f085bbff11effe7e8ab93

Citations in the corpus

• Cross Country Differences in Job Reallocation: The Role of Industry, Firm Size and Regulations (2014, unknown): “On the one hand, fixed adjustment costs that are unrelated to firm size may make the area of inaction larger for small firms compared with larger ones (see e.g. Nilsen et al., 2007).”