Employment functions, labour hoarding and the theory of adjustment.
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Employment functions, labour hoarding and the theory of adjustment. by David Deaton

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Published by Social Science Research Council. Industrial Relations Research Unit in Coventry .
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Edition Notes

SeriesDiscussion papers -- No.11.
The Physical Object
Pagination26p.
Number of Pages26
ID Numbers
Open LibraryOL19973896M

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Is Under‐Employment due to Labour Hoarding? Evidence from the Australian Workplace Industrial Relations Survey. Denise J. Doiron. 1 School of Economics, University of New South Wales, Sydney, Australia @ Search for more papers by this author. 1 Denise J. Doiron Cited by: In case of labour hoarding, firms switch to a more labour intensive production technology. The increased labour intensity leads to a rise in demand for labour. In the extreme case, the labour demand returns to D 0, resulting in full employment at real wage W 0. Firms will adopt labour hoarding if several. DEATON, D. R. () ‘Employment Functions, Labour Hoarding and the Theory of Adjustment’, Discussion Paper no. 11, (Coventry: Warwick University, Cited by: 6. The early literature, (e.g. Kollo, ) found that labour hoarding lowered employment elasticities in the presence of positive demand shocks. Our findings suggest that inherited labour hoarding.

The labor studies literature has for many years accepted the labor hoarding theory. That theory derives from seminal work by Oi (), Solow (), Miller (), and Fair (). Those studies argue that as a result of the absolute cost of hiring and training certain workers that even when the economy turns down, firms avoid layoffs as would be expected in a neoclassical framework.   This section provides an overview of output, employment and productivity behavior in the iron and steel industry between and The data set used to study output is the Japan Industry Productivity Database (JIP database). This data set was compiled as a part of the Japanese government’s project to calculate annual TFP for 84 sectors in Japan between and 18 . A few authors have tested for labour hoarding by investigating separately how employment has responded to positive and negative demand shocks (e.g., Bishop and Mickiewicz, ). However, these.   In this respect this work is more in the spirit of Burnside, Eichenbaum, and Rebelo () (BER for short), who look at implications of labor hoarding for business cycle theory. In BER's general equilibrium model the production technology in- cludes labor hoarding, while consumers' utility is decreasing in effort.

  (iii) Labour Hoarding The Hansen-Rogerson model assumes that firms can only increase total hours worked by increasing employment; it rules out any adjustment along the intensive margin. In contrast, Burnside et al. () place the main focus of their model on .   Highlights We develop and test the economic theory that can explain the pervasive empirical findings of sticky costs. If the theory holds, higher adjustment costs should increase stickiness. Employment protection legislation (EPL) strictness is a reliable empirical proxy for labor adjustment costs. In cross-country analysis for 19 OECD countries, stricter EPL is associated with higher. the costs of adjustment. Thus labor adjustment costs Œsuch as recruiting costs, costs of screening and training new employees, layo⁄ notice periods, and mandated severance pay Œplay a prominent role in determining both the timing and the extent of employment variation in response to exogenous shocks. In this article we document the patterns of employment adjustment at the micro level. We find clear evidence of lumpy adjustment consistent with the presence of nonconvexities in the adjustment technology—inaction is pervasive, action spells are short‐lived, and extreme adjustment episodes are responsible for a nontrivial share of employment adjustment.