Employment Dynamics and the Structure of Labor Adjustment Costs

Jose Varejao () and Pedro Portugal ()

Journal of Labor Economics, 2007, vol. 25, issue 1, 137-165

Abstract: In this article we document the patterns of employment adjustment at the micro level. We find clear evidence of lumpy adjustment consistent with the presence of nonconvexities in the adjustment technology—inaction is pervasive, action spells are short-lived, and extreme adjustment episodes are responsible for a nontrivial share of employment adjustment. We also find that the probability of employment adjustment increases with the duration of inaction. The skill structure of the workforce, the type of employment contract, and the proportion of low-tenure workers, which we interpret as proxies for the magnitude of adjustment costs, all influence the probability of adjustment.

Date: 2007
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Related works:
Working Paper: Employment Dynamics and the Structure of Labor Adjustment Costs (2006)
Working Paper: Employment Dynamics and the Structure of Labor Adjustment Costs (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlabec:v:25:y:2007:p:137-165

DOI: 10.1086/509825

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