The Cost of Labor Adjustment: Inferences from the Gap / Russell W. Cooper, Jonathan Willis.

Format:

Book

Author/Creator:

Cooper, Russell W.

Contributor:

National Bureau of Economic Research.

Willis, Jonathan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10006.

NBER working paper series no. w10006

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Cost of Labor Adjustment

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

We study labor adjustment costs. We specify a dynamic optimization problem at the plant-level, allowing for both convex and non-convex adjustment costs. We estimate the parameters of the adjustment process using an indirect inference procedure in which simulated moments are matched with data moments. For this study we use estimates of reduced-form adjustment functions obtained by the gap methodology' reported in Caballero-Engel as data moments. Contrary to evidence at the micro level in support of non-convex adjustment costs, our findings indicate that piecewise quadratic adjustment costs are sufficient to match these aggregate moments.

Notes:

Print version record

October 2003.