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Employment adjustment in German firms

  • Jung, Sven
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    Using a representative establishment data set for Germany, we show that, in line with the existing literature for several countries, firms' adjustment costs for employment are characterized by a fixed and convex functional form. Furthermore, they are asymmetric with dismissal costs exceeding hiring costs. An analysis of firms' adjustment in the period 1996-2010 also indicates that adjustment behavior has changed over time. Comparing the employment adjustment in the two observed business cycles comprising the years 1996-2003 and 2004-2010, we find that the adjustment speed was higher in the second business cycle indicating that adjustment costs have fallen in recent years.

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    Paper provided by Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics in its series Discussion Papers with number 80.

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    Date of creation: 2012
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    Handle: RePEc:zbw:faulre:80
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