A Genral Model of Dynamic Labor Demand
This study derives and estimates a dynamic model of factor demand that includes both fixed and quadratic variable costs of adjustment. Using quarterly data on the employment of mechanics at seven airlines, it finds that both types of adjustment costs characterize the dynamic constraints facing employers. Using monthly data covering production-worker employment in seven manufacturing plants, it shows that only fixed costs are important. The apparent diversity of the underlying costs of adjustment means it is difficult to draw useful inferences from macroeconometric estimates. It suggests the importance of examining broader arrays of microeconomic time series describing labor demand.
|Date of creation:||May 1990|
|Date of revision:|
|Publication status:||published as Review of Economics and Statistics, Vol.74, No. 4, pp.733-737,(Nov.1992).|
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- Hamermesh, Daniel S., 1990.
"Aggregate employment dynamics and lumpy adjustment costs,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 33(1), pages 93-129, January.
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NBER Working Papers
1931, National Bureau of Economic Research, Inc.
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- Robert F. Engle & Ta-Chung Liu, 1972. "Effects of Aggregation Over Time on Dynamic Characteristics of an Econometric Model," NBER Chapters, in: Econometric Models of Cyclical Behavior, Volumes 1 and 2, pages 673-737 National Bureau of Economic Research, Inc.
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