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

  • Kenji Azetsu

    ()

    (Graduate School of Economics, Kobe University)

  • Mototsugu Fukushige

    ()

    (Graduate School of Economics, Osaka University)

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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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
Contact details of provider: Web page: http://www.econ.osaka-u.ac.jp/Email:


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  1. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security and Work Force Adjustment: How Different are U.S. and Japanese Practices?," Book chapters authored by Upjohn Institute researchers, in: Christopher F. Buechtemann (ed.), Employment Security and Labor Market Behavior: Interdisciplinary Approaches and International Evidence, pages 180-199 W.E. Upjohn Institute for Employment Research.
  2. Daniel S. Hamermesh, 1988. "Labor Demand and the Structure of Adjustment Costs," NBER Working Papers 2572, National Bureau of Economic Research, Inc.
  3. Goux, Dominique & Maurin, Eric & Pauchet, Marianne, 2001. "Fixed-term contracts and the dynamics of labour demand," European Economic Review, Elsevier, vol. 45(3), pages 533-552, March.
  4. Jaramillo, F. & Schiantarelli, F. & Sembenelli, A., 1992. "Are Adjustment Costs for Labor Asymetric? An Econometric Test On Panel Data for Italy," Working Papers 92-13, C.V. Starr Center for Applied Economics, New York University.
  5. Andrew Hildreth and Fumio Ohtake, . "Labor Demand and the Structure of Adjustment Costs in Japan," Economics Discussion Papers 469, University of Essex, Department of Economics.
  6. PFANN, Gerard A. & PALM, Franz C., . "Asymmetric adjustment costs in non-linear labour demand models for the Netherlands and U.K. manufacturing sectors," CORE Discussion Papers RP -1044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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