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The Estimation of Asymmetric Adjustment Costs for the Number of Workers and Working Hours |Empirical Evidence from Japanese Industry Data

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Author Info

  • Kenji Azetsu

    ()
    (Graduate School of Economics, Kobe University)

  • Mototsugu Fukushige

    ()
    (Graduate School of Economics, Osaka University)

Abstract

In this paper, we investigate the asymmetry of adjustment costs for labour. Using monthly data on Japanese industries, we estimate a model of dynamic labour demand that incorporates adjustment costs for hiring and firing workers, and for changing working hours. Our estimates suggest the following. (1) It is more costly to fire workers than to hire them in all industries. (2) This asymmetry between hiring and firing costs is more important for production sectors than for non-production sectors. (3) It is much less costly to adjust working hours than to adjust the number of workers.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0518.pdf
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Bibliographic Info

Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 05-18.

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Length: 13 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:osk:wpaper:0518

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Web page: http://www.econ.osaka-u.ac.jp/
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Keywords: Adjustment costs; Dynamic labour demand; Working hours;

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  1. Dominique Goux & Eric Maurin & Marianne Pauchet, 1999. "Fixed-term Contracts and the Dynamics of Labour Demand," Working Papers 99-02, Centre de Recherche en Economie et Statistique.
  2. Katharine G. Abraham & Susan N. Houseman, 1990. "Job Security and Work Force Adjustment: How Different are U.S. and Japanese Practices?," NBER Working Papers 3155, National Bureau of Economic Research, Inc.
  3. PFANN, Gerard & PALM, Franz, 1992. "Asymmetric adjustment costs in non-linear labour demand models for the Netherlands and UK manufacturing sectors," CORE Discussion Papers 1992017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Hamermesh, Daniel S, 1989. "Labor Demand and the Structure of Adjustment Costs," American Economic Review, American Economic Association, vol. 79(4), pages 674-89, September.
  5. Fidel Jaramillo & Fabio Schiantarelli & Alessandro Sembenelli, 1991. "Are Adjustment Costs for Labor Asymmetric? An Econometric Test on Panel Data for Italy," Papers 0021, Boston University - Industry Studies Programme.
  6. Hildreth, A-K-G & Ohtake, F, 1997. "Labor Demand and the Structure of Adjustment Costs in Japan," ISER Discussion Paper 0434, Institute of Social and Economic Research, Osaka University.
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Cited by:
  1. Ariga, Kenn & Kambayashi, Ryo, 2010. "Employment and wage adjustments at firms under distress in Japan: An analysis based upon a survey," Journal of the Japanese and International Economies, Elsevier, vol. 24(2), pages 213-235, June.
  2. Kenji Azetsu & Mototsugu Fukushige, 2005. "Job Security Laws and Structural Change in the Japanese Labor Market," Discussion Papers in Economics and Business 05-31, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

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