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Hamermesh, Daniel S.; Pfann, Gerard A.
Economica (London), 08/1996, Letnik: 63, Številka: 251Journal Article
Using a generalized asymmetric adjustment function including both costs of changing employment (net changes) and costs of hiring or firing (gross changes), we derive the profit-maximizing path of employment demand and the Euler equation whose parameters we estimate. Identifying the two types of costs requires complete data on turnover, which were available for US manufacturing through 1981 and which demonstrate that both types of costs are needed to track aggregate employment fluctuations if one assumes that costs are symmetric. Allowing for asymmetry, the apparent importance of variations in the turnover rate disappears.
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