Employment Adjustment versus Hours Adjustment: Is Job Security Desirable?
AbstractFirms can adjust to shocks by laying off and hiring workers or by adjusting the hours worked by each worker. Adjustment of hours provides job security for employed workers. Adjustment of employment generates higher labor market turnover and, thus, better job prospects for the unemployed. Since high turnover lowers the expected cost of being laid off by reducing the expected duration of unemployment, there is a strategic complementarity between firms in the provision of job security. This gives the possibility of multiple equilibria with different amounts of turnover. Copyright 1995 by The London School of Economics and Political Science.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 62 (1995)
Issue (Month): 248 (November)
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- Stuart Glosser & Lonnie Golden, 2005. "Is labour becoming more or less flexible? Changing dynamic behaviour and asymmetries of labour input in US manufacturing," Cambridge Journal of Economics, Oxford University Press, vol. 29(4), pages 535-557, July.
- Smith, Michael R., 2000. "How the internal flexibility of plants in the U.S. paper industry was increased and what it tells us about the effects of employment security," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 28(6), pages 691-705, June.
- Hogan, Seamus & Ragan, Christopher, 1998. "Job security with equilibrium unemployment," Labour Economics, Elsevier, vol. 5(2), pages 185-185, June.
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