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The Costs of Hiring and Separations

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  • John M. Abowd
  • Francis Kramarz

Abstract

In this article, we estimate the costs of hiring, separation, and retirement of employees for a representative sample of French establishments in 1992. The estimates are computed using data from three sources: the Wage Structure Survey (ESS), the Workforce Movement Questionnaire (DMMO), and the Occupational Structure Survey (ESE). We show that the estimated costs are generally asymmetric (hiring is cheaper than terminations), increasing, and concave functions of the number of entries or exits (either retirements or terminations). There is a fixed component to each of these costs that is related to the structure of the firm's personnel department. Our estimates imply that firms should not adjust gradually to the desired level of employment.

Suggested Citation

  • John M. Abowd & Francis Kramarz, 1997. "The Costs of Hiring and Separations," NBER Working Papers 6110, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6110
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    References listed on IDEAS

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    1. Emmanuel Delame & Francis Kramarz, 1997. "Entreprises et formation continue," Économie et Prévision, Programme National Persée, vol. 127(1), pages 63-82.
    2. Pfann, Gerald A. & Verspagen, Bart, 1989. "The structure of adjustment costs for labour in the Dutch manufacturing sector," Economics Letters, Elsevier, vol. 29(4), pages 365-371.
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    5. John M. Abowd & Patrick Corbel & Francis Kramarz, 1999. "The Entry And Exit Of Workers And The Growth Of Employment: An Analysis Of French Establishments," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 170-187, May.
    6. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
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    12. Ricardo J. Caballero & Eduardo M. R. A. Engel, 1993. "Microeconomic Adjustment Hazards and Aggregate Dynamics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 359-383.
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