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An examination of firms' employment costs

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Author Info
Sarah Dolfin
Abstract

The existence of quasi-fixed costs of work may affect firms' desired employee hours and number of workers, which has important implications for the estimation of labour supply parameters. Firm-level data from the 1982 Employment Opportunity Pilot Project is used to estimate the importance to firms of employee quasi-fixed costs related to searching, hiring, training, and firing. Specifically, this paper examines how these costs affect number of workers and hours per worker, turnover, and vacancies, to the extent that the costs are determined by the firm's presumably exogenous industrial classification. An attempt is made to control for biases due to employee heterogeneity as well. Results show that higher costs are associated with lower turnover, fewer vacancies, and longer hours as predicted by a model of labour demand.

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Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 38 (2006)
Issue (Month): 8 (May)
Pages: 861-878
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Handle: RePEc:taf:applec:v:38:y:2006:i:8:p:861-878

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Martinez-Granado, Maite, 2005. "Testing labour supply and hours constraints," Labour Economics, Elsevier, vol. 12(3), pages 321-343, June. [Downloadable!] (restricted)
  2. Camerer, Colin, et al, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 407-41, May.
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  3. David M. Cutler & Brigitte C. Madrian, 1998. "Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked," RAND Journal of Economics, The RAND Corporation, vol. 29(3), pages 509-530, Autumn. [Downloadable!] (restricted)
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  4. Joseph G. Altonji & Christina H. Paxson, 1986. "Job Characteristics and Hours of Work," NBER Working Papers 1895, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Buchmueller, Thomas C, 1999. "Fringe Benefits and the Demand for Part-Time Workers," Applied Economics, Taylor and Francis Journals, vol. 31(5), pages 551-63, May. [Downloadable!] (restricted)
  6. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-43, Nov.-Dec.. [Downloadable!] (restricted)
  7. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier. [Downloadable!] (restricted)
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  8. Joseph G. Altonji & Christina H. Paxson, 1990. "Labor Supply, Hours Constraints and Job Mobility," NBER Working Papers 3474, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Altonji, Joseph G & Paxson, Christina H, 1988. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Trade-Offs," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 254-76, April. [Downloadable!] (restricted)
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  10. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1987. "Employer Size: The Implications for Search, Training, Capital Investment, Starting Wages, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 76-89, January. [Downloadable!] (restricted)
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  1. Silva , José Ignacio & Toledo, Manuel, 2009. "The Unemployment Volatility Puzzle: The Role of Matching Costs Revisited," MPRA Paper 17719, University Library of Munich, Germany, revised 08 Oct 2009. [Downloadable!]
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