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The Estimation of Asymmetric Adjustment Costs for the Number of Workers and Working Hours |Empirical Evidence from Japanese Industry Data

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  • Kenji Azetsu

    (Graduate School of Economics, Kobe University)

  • Mototsugu Fukushige

    (Graduate School of Economics, Osaka University)

Abstract

In this paper, we investigate the asymmetry of adjustment costs for labour. Using monthly data on Japanese industries, we estimate a model of dynamic labour demand that incorporates adjustment costs for hiring and firing workers, and for changing working hours. Our estimates suggest the following. (1) It is more costly to fire workers than to hire them in all industries. (2) This asymmetry between hiring and firing costs is more important for production sectors than for non-production sectors. (3) It is much less costly to adjust working hours than to adjust the number of workers.

Suggested Citation

  • Kenji Azetsu & Mototsugu Fukushige, 2005. "The Estimation of Asymmetric Adjustment Costs for the Number of Workers and Working Hours |Empirical Evidence from Japanese Industry Data," Discussion Papers in Economics and Business 05-18, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:0518
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    References listed on IDEAS

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    1. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security and Work Force Adjustment: How Different are U.S. and Japanese Practices?," Book chapters authored by Upjohn Institute researchers, in: Christopher F. Buechtemann (ed.),Employment Security and Labor Market Behavior: Interdisciplinary Approaches and International Evidence, pages 180-199, W.E. Upjohn Institute for Employment Research.
    2. Jaramillo, Fidel & Schiantarelli, Fabio & Sembenelli, Alessandro, 1993. "Are Adjustment Costs for Labor Asymmetric? An Econometric Test on Panel Data for Italy," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 640-648, November.
    3. Hildreth, Andrew K. G. & Ohtake, Fumio, 1998. "Labor Demand and the Structure of Adjustment Costs in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 131-150, June.
    4. Gerard A. Pfann & Franz C. Palm, 1993. "Asymmetric Adjustment Costs in Non-linear Labour Demand Models for the Netherlands and U.K. Manufacturing Sectors," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(2), pages 397-412.
    5. Goux, Dominique & Maurin, Eric & Pauchet, Marianne, 2001. "Fixed-term contracts and the dynamics of labour demand," European Economic Review, Elsevier, vol. 45(3), pages 533-552, March.
    6. Hamermesh, Daniel S, 1989. "Labor Demand and the Structure of Adjustment Costs," American Economic Review, American Economic Association, vol. 79(4), pages 674-689, September.
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    Cited by:

    1. Sachiko Kazekami, 2016. "Incidence, Optimal Use and Rationale of Place-Based Job Creation Programs," SERIES 02-2016, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Mar 2016.
    2. Ariga, Kenn & Kambayashi, Ryo, 2010. "Employment and wage adjustments at firms under distress in Japan: An analysis based upon a survey," Journal of the Japanese and International Economies, Elsevier, vol. 24(2), pages 213-235, June.
    3. Tomohiko Noda, 2013. "Determinants of the Timing of Downsizing Among Large Japanese Firms: Long-Term Employment Practices and Corporate Governance," The Japanese Economic Review, Japanese Economic Association, vol. 64(3), pages 363-398, September.
    4. Kölling, Arnd, 2018. "It's not about adjustment costs: Estimating asymmetries in long-run labor demand using a fractional panel probit model," Working Papers 95, Berlin School of Economics and Law, Institute of Management Berlin (IMB).
    5. Tomohiko Noda & Daisuke Hirano, 2024. "The effect of enterprise unions on employment adjustment speed in Japanese firms," British Journal of Industrial Relations, London School of Economics, vol. 62(3), pages 645-669, September.
    6. Kenji Azetsu & Mototsugu Fukushige, 2005. "Job Security Laws and Structural Change in the Japanese Labor Market," Discussion Papers in Economics and Business 05-31, Osaka University, Graduate School of Economics.
    7. Kazuyuki Inagaki, 2012. "Labor adjustment in the Japanese health care industry: some empirical evidence," Health Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 173-177, February.

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    More about this item

    Keywords

    Adjustment costs; Dynamic labour demand; Working hours;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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