Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants

Marcela Eslava, John Haltiwanger, Adriana Kugler and Maurice Kugler (mkugler@gmu.edu)
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John Haltiwanger: University of Maryland, NBER, and IZA

The Review of Economics and Statistics, 2010, vol. 92, issue 2, 378-391

Abstract: We analyze nonlinear adjustments of capital and labor using plant data from the Colombian Annual Manufacturing Survey, allowing for interdependence in adjustments of the two factors. We find nonlinear employment and capital adjustments. We also find that capital shortages reduce hiring, and labor surpluses reduce capital shedding. Moreover, we find that job destruction and capital formation increased after factor market deregulation in Colombia. Finally, we find that completely eliminating frictions in factor adjustment would yield a substantial increase in aggregate productivity through improved allocative efficiency, but that the actual impact of the Colombian deregulation on productivity was modest. © 2010 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2010
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Related works:
Working Paper: Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants (2008)
Working Paper: Factor Adjustments After Deregulation: Panel Evidence from Colombian Plants (2008)
Working Paper: Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants (2005)
Working Paper: Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants (2005)
Working Paper: Factor Adjustments After Deregulation: Panel Evidence from Colombian Plants (2005)
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