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How do firms adjust production factors to the cycle?

Gilbert Cette, Rémy Lecat and A-O-A Jiddou

Working papers from Banque de France

Abstract: We study production factor adjustment taking into account factor utilisation in multiple dimensions (labour and capital working time, capital capacity utilisation) through a unique survey among French manufacturing firms. This survey also allows us to examine the impact of obstacles to increasing capital operating time on this adjustment path. This survey, merged with balanced sheet and profit and loss accounts from fiscal reports, yields an unbalanced panel of 6,066 observations over 1993-2010. Factor utilisation adjusts the most rapidly, first through capital capacity utilisation and the capital workweek and then labour working time. The adjustment is slow for the number of employees and even slower for the capital stock. In case of a change in factor volume targets, the three factor utilisation degrees adjust to offset the very slow reaction of factor volumes. Obstacles to increasing the capital operating time lead to a slower adjustment of capital operating time, offset by a stronger adjustment of capacity utilisation.

Keywords: production function; factor utilisation; rigidities. (search for similar items in EconPapers)
JEL-codes: D24 E22 O43 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2014
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: How do firms adjust production factors to the cycle? (2016) Downloads
Working Paper: How do firms adjust production factors to the cycle? (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:484

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