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Adjustment costs and factor demand: some lessons from corporate real estate

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  • Antonin BERGEAUD
  • Simon RAY

Abstract

The adjustment costs associated with a change in the quantity of production factors (labour and capital) hinder the optimal allocation of these factors and stifle corporate growth. This issue of Rue de la Banque uses the example of the tax on real estate gains to estimate the impact of these frictions on the behaviour of firms. At the aggregate level, these frictions hamper the creation of jobs by productive companies and the reallocation of jobs from less productive to more productive firms.

Suggested Citation

  • Antonin BERGEAUD & Simon RAY, 2018. "Adjustment costs and factor demand: some lessons from corporate real estate," Rue de la Banque, Banque de France, issue 64, June.
    • Handle: RePEc:bfr:rueban:2018:64
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    File URL: https://publications.banque-france.fr/sites/default/files/medias/documents/rue-de-la-banque_64_2018-06_en.pdf
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    References listed on IDEAS

    as
    1. Luis Garicano & Claire Lelarge & John Van Reenen, 2016. "Firm Size Distortions and the Productivity Distribution: Evidence from France," American Economic Review, American Economic Association, vol. 106(11), pages 3439-3479, November.
    2. repec:dgr:rugsom:02d31 is not listed on IDEAS
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    6. Aleid E. Brouwer & Ilaria Mariotti & Jos N. van Ommeren, 2004. "The firm relocation decision: An empirical investigation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(2), pages 335-347, June.
    7. Antonin Bergeaud & Simon Ray, 2021. "Adjustment Costs and Factor Demand: New Evidence from Firms’ Real Estate [The heterogeneous impact of market size on innovation: evidence from French firm-level exports]," The Economic Journal, Royal Economic Society, vol. 131(633), pages 70-100.
    8. Russell W. Cooper & John C. Haltiwanger, 2006. "On the Nature of Capital Adjustment Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(3), pages 611-633.
    9. Pellenbarg, P.H. & Wissen, L.J.G. van & Dijk, J. van, 2002. "Firm relocation: state of the art and research prospects," Research Report 02D31, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    Full references (including those not matched with items on IDEAS)

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