Asymmetric Labor Adjustment, Organizational Capital and Aggregate Job Flows

Fransisco M. Ganzalez and Alok Johri

Department of Economics Working Papers from McMaster University

Abstract: This paper illustrates how the destruction of firm-specific organizational capital associated with changes in firm-level employment can influence the behavior of ag- gregate job flows, even in the presence of heterogeneity across rms and even in the absence of aggregate shocks. Our analysis highlights the potential importance of the distinction between adjustment costs that are associated with a loss of output (output-costs of labor adjustment) and those associated with a loss of organizational capital (OC-costs of labor adjustment). In particular, the analysis indicates how this link between organizational capital and labor demand can shape the behavior of net employment growth and gross job reallocation when conventional hiring and bring costs of adjustment may be unable to do so.

JEL-codes: E00 J00 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2002-03
New Economics Papers: this item is included in nep-lab and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2002-03

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