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Title:Employment dynamics and the structure of labor adjustment costs PDF Logo
Authors:Varejão, José
Portugal, Pedro
Issue Date:2006
Series/Report no.:IZA Discussion Papers 1922
Abstract:In this paper we document the patterns of employment adjustment at the micro-level. We find clear evidence of lumpy adjustment consistent with the presence of non-convexities in the adjustment technology - inaction is pervasive, action spells are short-lived, extreme adjustment episodes occur and are responsible for a non-trivial share of employment adjustment. We also find that the probability of employment adjustment increases with the duration of inaction (positive duration dependence). The skill structure of the workforce, the type of employment contract and the proportion of low tenure workers, which we interpret as proxies for the magnitude of adjustment costs, all influence the probability of adjustment.
Subjects:adjustment costs
job flows
worker flows
duration models
JEL:J23
J63
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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