Dynamics of labor demand: Evidence from plant-level observations and aggregate implications

Russell Cooper; John Haltiwanger; Jonathan L. Willis

doi:10.1016/j.rie.2015.01.002

Dynamics of labor demand: Evidence from plant-level observations and aggregate implications

Russell Cooper, John Haltiwanger, Jonathan L. Willis

Economics

Research output: Contribution to journal › Article › peer-review

9 Scopus citations

Abstract

This paper studies the dynamics of labor demand at the plant level to quantify labor adjustment costs. At the plant level, in contrast to time-series observations, the correlation of hours and employment growth is negative while hours and employment growth are about equally volatile. We specify and estimate the parameters of a plant-level dynamic optimization problem using simulated method of moments to match these plant-level observations. Our findings indicate that non-convex adjustment costs are critical for explaining plant-level observations on hours and employment adjustment.

Original language	English (US)
Pages (from-to)	37-50
Number of pages	14
Journal	Research in Economics
Volume	69
Issue number	1
DOIs	https://doi.org/10.1016/j.rie.2015.01.002
State	Published - Mar 1 2015

All Science Journal Classification (ASJC) codes

Economics and Econometrics

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10.1016/j.rie.2015.01.002

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title = "Dynamics of labor demand: Evidence from plant-level observations and aggregate implications",

abstract = "This paper studies the dynamics of labor demand at the plant level to quantify labor adjustment costs. At the plant level, in contrast to time-series observations, the correlation of hours and employment growth is negative while hours and employment growth are about equally volatile. We specify and estimate the parameters of a plant-level dynamic optimization problem using simulated method of moments to match these plant-level observations. Our findings indicate that non-convex adjustment costs are critical for explaining plant-level observations on hours and employment adjustment.",

author = "Russell Cooper and John Haltiwanger and Willis, {Jonathan L.}",

note = "Funding Information: We are grateful to participants at the 2003 Madrid Conference on Lumpy Investment, Durable Purchases and Technical Change, the 2003 Society of Economic Dynamics conference, the 2003 ITAM-University of Texas Conference, the 2004 CMSG conference and the 2004 NBER Summer Institute. The authors thank the NSF for financial support and the Federal Reserve Bank of Minneapolis for its hospitality.",

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