Employment adjustment in German firms

Sven Jung

No 80, Discussion Papers from Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics

Abstract: Using a representative establishment data set for Germany, we show that, in line with the existing literature for several countries, firms' adjustment costs for employment are characterized by a fixed and convex functional form. Furthermore, they are asymmetric with dismissal costs exceeding hiring costs. An analysis of firms' adjustment in the period 1996-2010 also indicates that adjustment behavior has changed over time. Comparing the employment adjustment in the two observed business cycles comprising the years 1996-2003 and 2004-2010, we find that the adjustment speed was higher in the second business cycle indicating that adjustment costs have fallen in recent years.

Keywords: adjustment costs; dynamic labor demand; employment adjustment; Germany (search for similar items in EconPapers)
JEL-codes: C24 D22 E24 J23 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:faulre:80

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