IDEAS home Printed from https://ideas.repec.org/a/aea/jeclit/v34y1996i3p1264-1292.html
   My bibliography  Save this article

Adjustment Costs in Factor Demand

Author

Listed:
  • Daniel S. Hamermesh
  • Gerard A. Pfann

Abstract

This study discusses the nature of adjustment costs, which underlie the dynamic theory of input demand. We examine the implications of the conventional assumption that they are quadratic-symmetric and of various alternatives. A recent rapidly growing literature based on microeconomic data shows that the conventional assumption is inferior. We demonstrate the importance of this new knowledge for predicting macroeconomic fluctuations in employment and investment. We indicate its relevance for constructing general equilibrium simulation models, drawing inferences about the likely impacts of labor-market and investment policies, and analyzing firms' dynamic behavior in factor markets.

Suggested Citation

  • Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
  • Handle: RePEc:aea:jeclit:v:34:y:1996:i:3:p:1264-1292
    as

    Download full text from publisher

    File URL: http://www.e-jel.org/archive/sept1996/Hamermes.pdf
    Download Restriction: Access to full text is restricted to AEA members.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jeclit:v:34:y:1996:i:3:p:1264-1292. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.